Since their inception two years ago, health savings accounts (HSAs) have grown to almost $1 billion in tax-advantaged funds, according to an Inside Consumer-Directed Care (ICDC) report. The estimates in ICDC's February 24 newsletter, published by Atlantic Information Services (AIS) in Washington, DC, are based on financial data provided by more than 60 firms, including JPMorgan Chase, Wells Fargo, and The Principal Financial Group.
HSAs, a provision of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, are similar to 401(k) retirement plans in their portability and can be opened by virtually anyone who has a high-deductible health plan.
"The HSA is like a medical IRA," said William Short, director of health care services for UMB Bank and an adjunct scholar with the Flint Hills Center for Public Policy. Funds can be invested and grow on a tax-free basis, said Short, and then, at age 65, the individual can take out the funds for any purpose without incurring the standard 10 percent penalty for nonqualified expenditures. "HSAs also function like a checking account," he explained. "Individuals can pull out money for health expenditures at any time."
Saturday, April 01, 2006
Balances in HSAs Approach $1 Billion
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