HSA Intelligence Newsletter - Special Post-Election Analysis

EDITOR’S NOTE: This is an analysis of the prospective landscape for health savings accounts given the surprising results of the 2024 national election rather than the standard listicle version of HSA Intelligence, to be continued in January (Click HERE to receive the HSA Intelligence newsletter in your inbox)

Health Savings Accounts: Could This Be the Most Transformative Personal Investing Opportunity since the 401(k)? 

The political landscape has shifted with the Republican Party gaining control of the White House and both houses of Congress, potentially setting the stage for a significant expansion of Health Savings Accounts (HSAs) in 2025. With provisions of the Tax Cuts and Jobs Act of 2017 coming up for renewal, there is a strong possibility of changes that could rival the transformative impact of the introduction of the 401(k). If realized, expanded eligibility and dramatically higher contribution limits might drive unprecedented growth in both the number of HSA account holders and the total funds allocated to these accounts. 

The Potential Leap in Contribution Limits 

The Republican majority appears poised to prioritize increasing HSA contribution limits, with two major legislative proposals leading the discussion: 

Health Savings Accounts for All Act 

Proposed by Senator Rand Paul days after the election, this act aims to align HSA contribution limits with 401(k) limits - taking them from $4,300 to $23,500, potentially enabling individuals to save substantially more for healthcare expenses. 

Personalized Care Act 

Introduced by Representative Chip Roy and Senator Ted Cruz, this proposal suggests raising individual HSA limits to $10,800 and family limits to $29,500—a nearly fourfold increase. If passed, these changes could transform HSAs from supplementary savings tools into primary vehicles for healthcare financing and retirement planning. 

While such increases would provide unparalleled opportunities for tax-advantaged savings, particularly for those with significant healthcare expenses or retirement planning needs, it remains uncertain how quickly these proposals might pass or whether they will face significant opposition. 

Expanding Accessibility: A Work in Progress 

Broadening Eligibility 

The Health Savings Accounts for All Act could revolutionize HSA access by making everyone eligible, regardless of whether they have a high-deductible health plan (HDHP). This fundamental shift would remove a key barrier to entry and significantly expand the number of potential HSA account holders.

 Additionally, Congress is considering proposals to extend HSA eligibility to veterans, acknowledging the unique healthcare needs of those who have served in the military. Such changes would further widen the scope of HSA participation and bring millions of new savers into the fold. 

Another major development is the appointment of Robert F. Kennedy Jr. as the incoming Director of Health and Human Services. Tasked with radically improving healthcare in the U.S., Kennedy is actively consulting with Calley Means, founder of Truemed—a company that has significantly expanded access to preventative health products and services through tax-free HSA dollars. This collaboration could signal a substantial push toward making HSAs more accessible and impactful. 

Medicare Integration 

Proposed reforms could allow Medicare Advantage plans to become HSA-qualified, enabling seniors to continue contributing to their accounts after Medicare enrollment—a long-standing limitation for retirees. There are 32.8 million Medicare Advantage enrollees today.
One proposal involves the option to redirect Medicare Part B premiums into HSAs, potentially giving seniors more control over their healthcare budgets while maintaining coverage. 

For working seniors delaying Medicare enrollment, new provisions might allow continued HSA contributions, with catch-up opportunities to accelerate savings in later years. However, the scope and feasibility of these changes remain to be seen. 

Medicaid Modernization 

States may be granted authority to create HSA-like accounts for Medicaid beneficiaries, funded through federal allocations. This approach could empower millions of low-income Americans to save for future healthcare expenses while retaining Medicaid coverage. 
Several pilot programs are already exploring the combination of Medicaid benefits with HSA features, but broader adoption will likely depend on the success of these early efforts. 

Flexibility in HSA Plans: A Promising Direction 

Reforms under consideration could redefine the structure of HSA-qualified plans, potentially enabling: 

Value-Based Insurance Design 

Plans might cover high-value services like preventive care and essential medications before the deductible, prioritizing services that reduce long-term costs and improve outcomes. 

Chronic Condition Management 

Expanded definitions of preventive care could facilitate pre-deductible coverage for managing chronic illnesses, encouraging consistent care and reducing financial barriers. 

Comprehensive Care Coordination 

Plans may implement advanced care management for complex conditions, positioning HSAs as a cornerstone of holistic healthcare financing. However, these changes depend on legislative support and stakeholder buy-in. 

Modernizing Qualified Expenses: A Growing Consensus 

Proposed expansions would modernize HSA-qualified expenses to reflect a broader view of health and wellness: 

Preventive and Wellness Services 

Coverage might extend to fitness programs, nutritional counseling, and mental health initiatives, reflecting the importance of preventive care. 

Evidence-Based Alternative Treatments 

Services such as acupuncture and therapeutic massage could qualify for HSA funds when prescribed for medical conditions, but questions remain about how these changes will be implemented. 

Technology-Driven Solutions 

Proposed updates could include health monitoring devices, telehealth services, and remote patient monitoring equipment, aligning HSAs with the digital transformation of healthcare. 

A Potential Turning Point for Personal Finance 

Projected Growth: What the Numbers Could Look Like 

To understand the potential impact of these proposed changes, consider the following projections: 

Current Projections Without new Legislation (for context) 

2025 Deposits: $89.0 billion 
2026 Deposits: $95.3 billion 
2025 Investments: $69.1 billion 
2026 Investments: $79.5 billion 

Revised Projections with New Legislation in 2025 

2026 Deposits: $222.5 billion 
2027 Deposits: $417.2 billion 
2026 Investments: $66.8 billion 
2027 Investments: $146.0 billion 

Key Drivers of Growth 

• Increased Participation: Expanded eligibility could lead to a 50% increase in the number of HSA accounts over two years.
•  Higher Contributions: With higher contribution limits, average contributions per account could reach $6,000 per individual, significantly boosting total deposits. 
• More Investments: As balances grow, more account holders are likely to invest their funds, with the proportion of invested accounts increasing from 25% to 35%. 

These projections highlight the immense potential for HSAs to reshape personal finance. If these changes are enacted, HSAs could fundamentally alter how Americans save for and manage healthcare expenses, offering an unprecedented opportunity for growth in both participation and funds under management. 

While the potential for HSAs to become central to a consumer-directed healthcare system is immense, the road ahead is not without challenges. For now, these proposals signal a bold vision for the future of HSAs—one that could redefine how Americans save for and manage their healthcare costs. 

Subscribe to HealthyWealth's HSA Intelligence newsletter here