Health savings accounts (HSAs) allow people to use tax-free money for medical needs—from checkups and glasses to pricey wellness products. But these funds cannot be used for insurance premiums, baby formula, or basic items like toothbrushes.
The Trump team and some Republicans are promoting HSAs as an alternative to enhanced ACA subsidies that are set to expire, but critics argue the legal limits on HSAs may prevent them from helping low-income ACA enrollees who struggle most with premium costs.
Cassidy’s Plan
Republicans have long supported HSAs as a way for people with high medical expenses to save money tax-free. Their new proposals build on recent policy changes that will allow millions more ACA enrollees—especially those on bronze and catastrophic plans—to open HSAs starting Jan. 1.
Instead of extending the pandemic-era enhanced ACA subsidies, some GOP lawmakers want to deposit federal funds directly into HSAs to help people manage medical costs.
Sen. Bill Cassidy is pushing this idea again, suggesting that shifting financial control to patients could be more effective. Democrats, however, strongly prefer extending premium subsidies, arguing that HSAs mostly benefit higher-income individuals.
Who Can Use HSAs?
The IRS restricts HSA use to people with high-deductible insurance plans, and there are annual limits on how much can be contributed—$4,400 for individuals and $8,750 for families in 2026.
HSAs cannot legally be used for insurance premiums, meaning they won’t directly address rising monthly premium costs. Without subsidies, ACA enrollees may see premiums rise by an average of 114% next year, which could push many to drop coverage or switch to plans with higher out-of-pocket costs.
An HHS Official’s Interest:
HSAs cover a wide range of medical products and services, and the list has expanded to include many over-the-counter items. As HSA use grows—up from $5 billion in assets 20 years ago to $146 billion last year—companies have begun targeting consumers with HSA-eligible wellness goods.
One such company is Truemed, co-founded by Calley Means, who recently joined the Department of Health and Human Services. Truemed offers a wide selection of HSA-eligible products, ranging from high-end saunas to fitness gear.
An HHS spokesperson clarified that Means will divest from the company and will not benefit financially from HSA policy expansions.