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Written by Reed Tinsley, CPA | May 5, 2008
Here is something interesting from last week's HFMA newsletter; as you might recall, there was a hope that health savings accounts participation would continue to rise.....................
A Government Accountability Office (GAO) brief released on April 30 reports that health savings accounts (HSAs) are used more often as a tax shelter by wealthy individuals rather than as a mechanism to help working families obtain needed health care.
Specifically, the report finds that instead of being used by low- and middle-income Americans most likely to be without health insurance, HSAs are increasingly a popular tax shelter option for wealthy taxpayers.
GAO’s findings are bolstered by HSA advocates’ extreme opposition to legislation passed earlier this month in the House (HR 5719) that would require HSA enrollees to substantiate that HSA withdrawals were used for allowable medical expenses. Data from at least one company indicate that HSA funds appear to have been spent on escort services, at casinos and bowling facilities, and in other non-health related areas. On the other hand, flexible spending accounts, a different tax-preferred health account with fewer tax breaks than HSAs, require substantiation. In addition, the federal government requires far more onerous verification standards to qualify for Medicaid and for the Part D low-income subsidy. Read the brief.
