The mystery behind Trump's obsession w/expanding HSAs, unveiled (and it's just as I expected)
Mon, 03/23/2026 - 9:23am
A health savings account (HSA) is a tax-advantaged medical savings account available to taxpayers in the United States who are enrolled in a high-deductible health plan (HDHP). The funds contributed to an account are not subject to federal income tax at the time of deposit. Unlike a flexible spending account (FSA), HSA funds roll over and accumulate year to year if they are not spent. HSAs are owned by the individual...
...HSA funds may be used to pay for qualified medical expenses at any time without federal tax liability or penalty. Beginning in early 2011 over-the-counter medications could not be paid with an HSA without a doctor's prescription, although that requirement was lifted as of January 1, 2020. Withdrawals for non-medical expenses are treated very similarly to those in an individual retirement account (IRA) in that they may provide tax advantages if taken after retirement age, and they incur penalties if taken earlier.
There's nothing wrong with the basic concept here; as I explained last fall, my wife and I have an HSA ourselves. which we hope will partially mitigate the expiration of the enhanced federal ACA tax credits which happened effective January 1st, 2026. However, HSAs are absolutely not a panacea and are actually fairly useless for most lower-income people since they require you to have several thousand dollars available to deposit into the account in the first place.
"Health Savings Account (HSA) Eligibility: President Trump's Working Families Tax Cuts Legislation expanded access to HSA-eligible plans that enable contributions to a consumer's HSA account by making all bronze and catastrophic Marketplace plans HSA-eligible plans. In 2026, this will make HSA-eligible plans available to every consumer in every county across the states that utilize HealthCare.gov. This expands access to HSA-eligible plans to at least 1.6 million additional HealthCare.gov consumers."
...More to the point, while it's not necessarily a terrible thing to expand HSA eligibility, utilizing a HSA requires you to actually have several thousand dollars of liquid cash you can spare to put into the account.
Furthermore, you have to be able to leave it there to be used exclusively for medical expenses, since withdrawing it & using it for any other purpose (like, say, paying your rent, utility bills, for food so you don't starve to death, etc) will incur a 20% additional tax on top of the normal income tax which you have to pay for withdrawing it.
The bottom line is that some people might benefit...but millions of others would still be screwed, and this all still assumes that every household would receive the same amount of FSA/HSA funding that they would if they just extended the damned enhanced APTC in the first place...which I highly doubt they have in mind.
More likely they would just seed the HSA accounts with a flat amount for each enrollee (again, the CBO projects the enhanced subsidies would cost around $24 billion, and there's around 24 million exchange enrollees, so that'd work out to around $1,000 apiece).
If they did something like this, again, it would be very helpful for some people...but would be almost useless for millions of others.
...In addition, all of this assumes that...
...b) Someone in all ~16 million or ACA households (assuming ~1.5 people per policy) understand how an FSA/HSA account works, how to use it & what the limitations are.
HSAs Luring People into Bronze Plans?
...Anything pushing people into low-AV Bronze plans--especially lower income enrollees who are normally eligible for 94% or 87% AV "Secret Platinum" plans--is a bad idea whether the enrollees realize it or not.
If killing off Silver Loading hurts those in the 200 - 700% FPL income brackets, pushing people into Bronze plans when they should be embracing "Secret Platinum" Silver plans hurts those who earn less than 200% FPL...who also make up a whopping 65% of all ACA exchange enrollees. PASS.
...I already covered the massive problems with the "HSAs for All!" proposal yesterday, but even then I was operating on the assumption that this would be limited to Bronze plans. Catastrophic plans--which are part of a separate risk pool from "Metal Level" ACA plans, with good reason--aren't currently eligible for ACA tax credits...again, with good reason.
If Trump is planning on letting "a portion of" tax credits be converted into HSA funds to be used with Catastrophic plans, it's very close to going down the same route as letting them be used for STLDs: This would undermine the ACA market by draining it of younger, healthier enrollees while leaving older, sicker enrollees in the ACA risk pool...thus turning it into a de facto "High Risk Pool" market by default.
That $1,500 HSA won't reduce any of those a dime. In fact, it'll only make the MOOP $100 less than it is this year, and that's only if they choose the Bronze plan, and only if they actually come close to maxing out their out of pocket costs.
So they'd still be spending $5,000 more to *possibly* save $100.
...Unlike traditional Health Savings Accounts, you wouldn't be able to roll the money over from one year to the next.
There's basically almost no one this would benefit--even wealthy people, believe it or not! What it would be is confusing as hell and incredibly complicated to set up logistically, legally, financially etc.
The larger problem with this, however, is that it would be one more method of pushing people into the last-comprehensive Bronze plans available...as opposed to encouraging them to enroll in highly comprehensive plans, especially high CSR Silver plans for enrollees under 200% FPL.
So...my take on the HSA section isn't so much "Hell No!" as it is "Why???"
Right out of the gate, this would not actually be a Health Savings Account under the current definition, since HSAs allow you to roll any unused funds from one year to the next.
...This is something which Republicans have become obsessed with since last fall: The idea, again, is that instead of providing financial assistance to cut your premiums down to size, they'd instead put the money into a Health Savings Account to cut down on your deductibles, co-pays & other out-of-pocket expenses...but only if you enroll in the least comprehensive plans on the market which have the highest deductibles & out of pocket costs (Bronze plans). In other words, it'd be a race to the bottom.
...(2) PAYMENT.—In the case of an eligible individual making an election under this subsection—
(A) the Secretary of Health and Human Services shall notify the Secretary of the Treasury of such election and the Exchange plan HSA into which the eligible individual has elected to receive a payment under this subsection, and
(B) notwithstanding section 1412(c) of the Patient Protection and Affordable Care Act, the Secretary of the Treasury shall make such advance payment of the premium tax credit to the Exchange plan HSA so indicated, and no portion of such advance payment shall be made to the issuer of the bronze level qualified health plan for such plan year.
Don't be surprised if the "Exchange Plan HSA" funds somehow end up being deposited into a "Trump HSA," by the way.
...which brings us to this breaking story from Judd Legum of Popular Information:
For the health savings account (HSA) industry, however, these are boom times. In a triumphant March 17 earnings call, HealthEquity, the nation’s largest administrator of HSAs, reported “accelerating earnings power… significant margin expansion, and record HSA sales.”
Stephen Neeleman, HealthEquity’s founder and board vice chairman, attributed the company’s recent success to policy changes enacted by the Trump administration. During the call, Neeleman credited Trump’s “One Big Beautiful Bill” for expanding HSA eligibility. He called the new law “the most significant structural change to the HSA market since the accounts were created.”
HSAs allow people to set aside a portion of their pre-tax income to pay for medical expenses. While more HSAs mean more profits for HealthEquity — and function as an effective tax shelter for the wealthy — they do little to reduce the costs or improve the quality of health care for working Americans.
HealthEquity is now making a major push for a more dramatic expansion of the HSA market. Meanwhile, a campaign finance report filed on Friday night revealed that MAGA, Inc, President Trump’s Super PAC, received a $1 million donation from HealthEquity on February 6. The money came directly from the company’s corporate treasury.
Welp. There you have it.
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