Republicans promote expansion of Health Savings Accounts (HSAs) as a method to make health care more affordable. An HSA has two primary advantages; 1) pre-tax contributions and 2) a lower monthly premium (typically employer advantage; families will still pay $300-600 per month).
The downside of an HSA is it must be tied to a High Deductible Health Plan (IRS Pub 969). The HDHP deductible range for a family in 2016 was $2,600-$13,100. Middle of the road family example. The annual premium contribution is $5,400 ($450/month) with a $5,000 deductible for a total out of pocket of $10,400/year. So, while the family saved $1,250 in taxes ($5,000 contribution x 25 percent tax), they will still pay an annual $9,150 out of pocket before insurance pays one cent in coverage.
Insurance companies do their best to set the deductible so when a person/family meets the deductible, a new calendar year starts, the insurance company has paid nothing, and the person/family starts paying a new year’s deductible again. So, beware.
The bottom line is a slightly lower tax burden doesn’t make health care more affordable when an individual/family pays 3-5 times more than the savings in high deductibles. I know, I’ve had one before.
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Gerald Eaton, Richland