The US Treasury and the Internal Revenue Service have announced new changes to health savings accounts (HSAs), implemented under US President Donald Trump's 'Big Beautiful Bill'. These modifications could significantly impact how Americans save for healthcare costs, especially as ongoing debates over Affordable Care Act (ACA) subsidies create uncertainty.
HSAs are tax-advantaged accounts designed for medical expenses. Typically, they are available to individuals enrolled in a High-Deductible Health Plan (HDHP). These accounts are popular due to their triple tax benefits: contributions can be deducted upfront from taxable income, the funds grow tax-free, and withdrawals for qualified medical expenses are also tax-free. Moreover, funds in an HSA roll over each year, can be invested, and are not lost if a person changes jobs, making them a flexible tool for healthcare planning and retirement savings.
