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The Future of HSAs Is Looking Bright

What Will HSAs Look Like Under Trump?

Health savings accounts (HSA) are arguably the best tax shelter in America—even better than 401(k)s, according to many financial experts. Currently, HSAs are restricted to consumers with very specific health coverage. With the election resulting in a Republican House, Senate and Executive Branch, it’s quite possible that HSAs—and their tax advantages—will become even more accessible.

President-elect Donald Trump is certainly a fan of HSAs. In fact, the idea of a tax-free HSA transfer to any heir, not just a spouse, is one of the key tenets of President-elect Trump’s platform.

Additionally, many of the names floated for potential Secretary of Health and Human Services (HHS) are big fans of HSA expansion. Rep. Tom Price (R-Ga), for example, introduced last year the Empowering Patients First Act, which would have expanded HSAs in several ways. And Former Louisiana Gov. Bobby Jindal released a plan in 2014 outlining 16 health care reforms, specifically including HSA expansion.

It’s likely that many of the provisions proposed in the Healthcare Act of 2016 will again see the light of day. If so, we could see eligibility restrictions relaxed, making HSAs available to even more Americans. The earlier proposal would have allowed certain Medicare recipients (those only on Part A), Native Americans, retired military covered by Tricare, and those receiving VA benefits to make HSA contributions, which isn’t the case today. For those who already have an HSA, the list of eligible expenses could expand dramatically. Proposed eligible expenses include over-the-counter medications (with or without a prescription), health insurance premiums, exercise equipment and fitness programs, and possibly even dietary and nutritional supplements.

Currently, HSAs are also a valuable retirement savings tool. Untapped funds can be invested for the future, since they roll over indefinitely. And many savvy accountholders pay for current medical expenses out-of-pocket and shoebox their receipts for future, unrestricted access to their HSA funds. Given Trump’s fiscal leanings, it’s unlikely these features will be dialed back in any way.

While it’s not possible to predict exactly what will happen with HSAs, it’s clear that Trump and many of his potential Cabinet officials have demonstrated they see the full value of these accounts. Any potential changes would more than likely open up access and loosen restrictions so that more Americans could see that value, too.