Health Savings Accounts have been around since 2003, but only about 17 percent of Americans have access to one.

Now some members of Congress think these tax-sheltered accounts could be a key to reducing the skyrocketing health care costs in the United States.

As costs have risen, President Donald Trump and several Republican lawmakers have proposed expanding the use of Health Savings Accounts to increase choice, improve competition, and save taxpayers money.

Here’s what to know about these accounts and the changes that have been proposed.

Tax Free for Medical Expenses

Health Savings Accounts are owned by an individual but held by a bank, credit union, or insurance company. Individuals or their employers can contribute to the accounts, and those funds can be withdrawn for qualified medical expenses.

An individual can deposit up to $4,300 annually. Families can deposit up to $8,550. People age 55 and older can add an extra $1,000.

The money is triple tax advantaged, meaning that all funds placed into the account are tax-free, interest earned while on deposit is not taxable, and there’s no tax on money withdrawn from the account if used for qualified medical expenses.

Also, the money can be rolled over from year to year, and the funds can be invested. The account stays with the individual when leaving an employer.

Limitations

Health Savings Accounts have some drawbacks. One is that they are only available for people who have high-deductible health insurance plans.

For individuals, that means a deductible of at least $1,700 for 2026. For families, the deductible must be at least $3,400. Out-of-pocket maximums must be at least $8,500 for an individual or $17,000 for a family.

The One Big Beautiful Bill extended use of these accounts to people who have Bronze or catastrophic health plans under Obamacare. But people on Medicaid, Medicare, and about 70 percent of people with commercial insurance can’t use them.

Also, Health Savings Accounts can’t be used to pay for health insurance premiums. And money withdrawn for anything but a qualified medical expense is subject to income tax plus a 20 percent penalty.

Currently, about 10 million Obamacare users qualify to use Health Savings Accounts. Another 45 million who have commercial insurance qualify. About 39 million accounts existed at the end of 2024.

Potential New Uses

Trump and a number of lawmakers suggested new uses for Health Savings Accounts last year amid discussions about the enhanced subsidies for Obamacare, which expired on Dec. 31.

Most of these proposals included placing Obamacare subsidies in Health Savings Accounts or something similar rather than paying the funds directly to insurance companies. The idea is to give people more control over their health care spending.

Trump proposed sending subsidy funds directly to consumers as part of his Great Healthcare Plan, though he did not specifically mention Health Savings Accounts.

Sen. Roger Marshall (R-Kan.) proposed a similar idea. Marshall’s plan would not allow Obamacare subsidies to be used to pay for abortion services except in cases of rape, incest, or a threat to the life of the mother.

Sen. Rick Scott (R-Fla.) proposed a plan similar to Marshall’s but with additional Obamacare subsidies added to cover Cost Sharing Reductions. These are legally mandated reductions in deductibles and out-of-pocket maximums for some low-income customers choosing a particular coverage plan.

The federal government does not reimburse insurance companies for this added expense, which has led them to raise premiums substantially on Silver-level plans.

Similar proposals to direct Obamacare subsidies to individuals’ Health Savings Accounts have been made by Sens. Mike Crapo (R-Idaho) and Bill Cassidy (R-La.).

Several other lawmakers proposed expanding the use of Health Savings Accounts for people who are not on Obamacare.

Rep. Chip Roy (R-Texas) and Sen. Ted Cruz (R-Texas) proposed widening eligibility to include people on Medicaid and other government programs, increasing the annual deposit limits, expanding the types of medical services that qualify, and reducing the tax penalties for non-qualified uses.

Similar plans to expand eligibility were introduced by Sen. Rand Paul (R-Ky.), Rep. Bob Latta (R-Ohio), and Rep. Beth Van Duyne (R-Texas).

Pros and Cons

Proponents of expanding the use of Health Savings Accounts say their plans would reduce costs largely by increasing competition and reducing administrative expenses.

However, the more significant aim of these proposals appears to be shifting control over health care spending from the federal government and insurance companies to individuals.

“Americans will always make a better choice for their families than the government will,” Scott said in a Nov. 25 press announcement.

Trump wrote on Jan. 15 that his health care plan “stops sending big insurance companies billions in extra taxpayer-funded subsidy payments and instead sends that money directly to eligible Americans.”

Cruz wrote in January 2025: “I’m fighting to return control to patients and their doctors—not Washington bureaucrats.”

Conservative groups including Heritage Action, Foundation for Government Accountability, and Americans for Tax Reform voiced support for expanded use of Health Savings Accounts.

Some analysts and lawmakers disagree with that analysis.

Rep. Richard Neal (D-Mass.) said funding Health Savings Accounts would do little to help people afford insurance, calling them “just another tax break for the wealthy,” in a Nov. 2025 statement.

The Center for American Progress, a progressive policy institute, stated that Health Savings Accounts disproportionately benefit wealthier people.

“Senate Republicans’ ... proposals redirect federal resources upward, leaving the people most at risk of losing coverage with the least assistance,” Madeline Shepherd, senior director of government affairs, Natasha Murphy, Topher Spiro, and Brian Keyser wrote in a Dec. 9 article on the group’s website.

Status of Proposals

The Crapo-Cassidy plan failed to advance in the Senate in December. No other proposal has been brought to a vote.

Trump has called on Congress to enact his Great Healthcare Plan into law. Some Republican House members are working with the White House to draft legislation regarding the Most Favored Nation prescription drug pricing portion of the plan.

There has been no indication that funded Health Savings Accounts or a similar device is under consideration.