Policy Initiatives:

The HSA Option

Allowing Low-Income Americans to Use a Portion of Their ACA Subsidy as a Health Savings Account Contribution

An effective way to

improve American well-being

Benefits of the HSA Option

The Health Savings Account (HSA) option will improve the welfare of lower-income Americans by offering them more control over their health care. An HSA can be used to help Americans pay out-of-network costs and expenses like vision, dental, and hearing care.

An HSA can grow year after year to help enrollees prepare for health care expenses later in life. The HSA option will improve competition and lower costs market wide.

Key Components of the HSA Option

  • Enrollees eligible for the CSR program will have the option to enroll in an HSA-qualified plan that offers an HSA contribution.
  • Insurers offering exchange plans will be required to offer a plan with an HSA option and an associated contribution for each of the actuarially equivalent plans required by the CSR program.
  • The insurer will make a monthly HSA deposit to the enrollee’s account.
  • The enrollee may access the HSA only with a bank-issued debit card that ensures the funds are used only for qualified medical expenses. 

Summary and Recommendation

The HSA option would allow enrollees to have another way to access their subsidy for an exchange plan. Many enrollees with incomes below 200 percent of the federal poverty level would have access to thousands of dollars in their HSAs each year if they selected the HSA option. This would allow enrollees much greater control over how to use the funds to best meet their preferences and needs.

Congress should combine an HSA option with a CSR appropriation and a prohibition on silver loading. Based on past Congressional Budget Office estimates, this would likely expand coverage and reduce deficits. 

© Paragon Health Institute 2022. All Rights Reserved.

Paragon Health Institute (PHI) is a non-partisan, not-for-profit policy research institute. Any views, beliefs, or opinions expressed by PHI’s Public Advisors are those of its Advisors and do not necessarily reflect the official policies or positions of PHI or its employees. Any views, beliefs, or opinions expressed by PHI or its employees belong solely to PHI and do not necessarily reflect those of PHI’s Public Advisors.