Health Savings Account Enrollment Increases

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On average, people enrolledin high-deductible health plans with health savings accounts in 2005 hadadjusted gross income of $139,000 compared to $57,000 for other taxpayers,according to a Government Accountability Office report released on Wednesday,CQ HealthBeat reports(Reichard, CQHealthBeat, 4/30). Separately, a report released on Wednesday by America's Health Insurance Plans found that enrollment in HSAs increased by 35%since early last year to 6.1 million people (Knight, Dow Jones,4/30).

HSAs allow individuals to deposit up to $2,900, or $5,800 for families, peryear in the account tax-free, and the funds roll over from year to year. Thefunds can be withdrawn for medical expenses or saved "for future needs,including retirement," according to the AP/San Francisco Chronicle (Freking, AP/San FranciscoChronicle, 4/30). According to the GAO report, HSA contributionsreported to the Internal Revenue Service in 2005 were more than twicewithdrawals at $754 million and $366 million, respectively (Dow Jones,4/30). GAO also found that 41% of HSA users who made contributions in 2005 didnot withdraw any funds that year (Johnson, CongressDaily, 4/30).In addition, the report found that four out of 10 people who enroll inhigh-deductible plans did not open an HSA even though they were eligible to doso. People cited a lack of information, cost or the belief that they did notneed the accounts as reasons for not enrolling.

The AHIP report found that more than a quarter of new enrollees inhigh-deductible health plans paired with HSAs previously were uninsured. Thereport also found that enrollment in the plans represents 3.4% of the privateinsurance market (AP/San Francisco Chronicle, 4/30).

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Democratic Scrutiny

House Oversight and Government Reform Committee Chair Henry Waxman (D-Calif.) andHouse Ways and Means HealthSubcommittee ChairPete Stark (D-Calif.) said that the GAO report shows that HSAs are not beingused by low- and middle-income U.S. residents who are the most likely to beuninsured. Stark said, "The GAO confirms that HSAs are not the way to meetthe health care needs of most Americans," adding, "Instead, they arean effective tax shelter for people whose average incomes are nearly triplethat of average tax filers." Waxman said, "This report providesfurther evidence that we need to re-examine whether this is the right way touse the government's resources to address our health care needs" (CQHealthBeat, 4/30). Waxman and Stark said that Congress should requireHSA enrollees to prove withdrawals from the accounts are for medical expenses.

AHIP Response

Karen Ignagni, presidentand CEO of AHIP, said that the GAO report shows that a typical HSA enrolleedeposited $2,100 and withdrew $1,000 in 2005. However, Ignagni said thosefigures are too low to describe what could be considered a tax shelter forwealthy people, the AP/Chronicle reports (AP/San FranciscoChronicle, 4/30). Ignagni said that "newer data indicate thatindividuals are not storing assets in these accounts but using them for healthcare services" (McQueen, Wall Street Journal, 5/1).

Reprintedwith permission from kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, and sign upfor email delivery at kaisernetwork.org/email . The Kaiser Daily Health PolicyReport is published for kaisernetwork.org, a free service of The Henry J.Kaiser Family Foundation.

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