Congressional Leaders Leery of HSAs

Wealthy Americans are the primary users of health savings accounts, according to a report from the Government Accountability Office.

Tax filers with HSA activity have higher incomes on average than others, earning about $139,000, compared with $57,000 for other filers.

Enrollment growth in the plans jumped between 2004 and 2007, with participation growing to 4.5 million people, from 438,000.

Additionally, the value of the HSA contributions reported to the IRS in 2005 was $754 million, nearly double the $366 million withdrawn from the accounts.

The GAO’s findings raised criticism from the House Oversight and Government Reform Committee Chairman Henry A. Waxman, D-California, and Ways and Means Health Subcommittee Chairman Pete Stark, D-California.

“HSAs clearly are attractive to higher-income people who are looking for tax shelters,” Waxman said in a statement issued by the two congressmen. “But they aren’t the answer for providing adequate health insurance coverage for the average American. This report provides further evidence that we need to re-examine whether this is the right way to use the government’s resources to address our health care needs.”

The accounts, which permit holders to accumulate tax-free savings to pay for medical expenses, are already in question: The House passed a bill in April that would require HSA trustees to substantiate the withdrawals and distributions from these accounts starting December 31, 2010.

HSA advocates fear this would raise the cost of the plans and turn customers off to the accounts.

Filed by Darla Mercado of Investment News, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.