Health Savings Accounts: Fueling the Consumer - Driven Health Plans Fire

In the Medicare Prescription Drug, Improvement and Modernization Act of 2003, Congress created health savings accounts (HSAs) as new Internal Revenue Code section 223. Employers can now cut health care costs by offering employees a high deductible health plan combined with an HSA. The goal of this plan design is to make participants more cautious health care consumers and thereby reduce health costs. Employees will find HSAs desirable because they can keep what they don't spend and earn interest on their account balance! Unlike certain plan design options, HSAs can be funded with employer contributions, pre-tax or after-tax employee contributions, or a combination of both.