WSJ Your Money Briefing - The New GOP Bill Could Make HSAs Even More Accessible

Episode Date: June 5, 2025

Health savings accounts cover at least 60 million Americans. Under the tax-and-spending bill’s proposed changes, another 20 million Americans could access these accounts’ tax savings. Host Julia Carpenter talks with tax reporter Laura Saunders about the most important changes in the bill.  Sign up for the WSJ's free Markets A.M. newsletter.  Learn more about your ad choices. Visit megaphone.fm/adchoices

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Rise to rewards with the BMO Eclipse Rise Visa Card. Terms and conditions apply. Here's your money briefing for Thursday, June 5th. I'm Julia Carpenter for the Wall Street Journal. Health savings accounts come with the much-lotted triple tax advantage. But soon, if the Republicans' tax and spending bill makes it through the Senate, there may be even more Americans who can take advantage of these savings. One thing to know is that the current legislation before the Senate, which the House has passed, would take away none of the current benefits of HSAs, but it would add more benefits.

Some of the updates would include changing HSA contributions for couples, permitting tax-free withdrawals for fitness expenses, and other provisions to expand these account benefits. We'll talk more with Wall Street Journal reporter Laura Saunders about what lawmakers are imagining for the future of health savings accounts. That's after the break. Discover days, enjoy limited time savings as you make plans to cruise through Muskoka or down Toronto's bustling streets. From now until June 30th, lease a 2025 Volvo XC60 from 1.74% and save up to $4,000. Conditions apply. Visit your GTA Volvo retailer or go to volvocars.ca for full details. Health savings accounts cover at least 60 million Americans. Under the tax and spending bills proposed changes, another 20 million Americans could access these accounts' tax savings. Tax reporter Laura Saunders joins us to talk more. Laura, I'd love if you could first zoom out a bit for our

listeners. What are HSAs and what are some of the benefits to having one? The HSA stands for Health Savings Account and these are accounts that are paired with high deductible healthcare coverage and you get the coverage and it has maybe a five or $10,000 deductible, that's pretty high. But at the same time, either you or your employer or both of you can put in several thousand dollars into the account that either can be used for health expenses like co-pays or you can save it if you can

afford to pay your costs through out of pocket or if you're healthy and that money can stay in the account for decades. It can grow and you can withdraw it later on to pay expenses you incurred years earlier. So it's a really special tax advantage savings account for health care expenses. And I just want to clarify, these are different than FSAs or flexible savings accounts, which some people use to buy everything from sunscreen to, you know, Theraguns. Yes, that's exactly right. Those are usually through employers, but there's a real limit to that.

These could go on and they could compound and grow. And even if you don't take the money out, you could take it out at 65 and use it like a supplemental IRA really. So some of the rules are the same as IRAs. The withdrawals are tax free if they're used for healthcare purposes. If you take the money out after 65, it'll be taxed normally like an IRA withdrawal if it's not for health expenses. And who is able to save with an HSA right now? A broad range of people, both people who are individuals and have health care through individual plans that they purchase, and also many, many

people have company plans that offer this as one of the options. But you're writing in your story, which is linked in our show notes, that that could change in the future. More people could have access to these plans. That's right. One thing to know is that the current legislation before the Senate, which the House has passed,

would take away none of the current benefits of HSAs, but it would add more benefits. I'm sure many people will be particularly interested in one of the proposed changes, which is how people can use their HSAs to pay for things like gym memberships and fitness classes. Yes, that's right. Up to $500 a year for an individual, up to $1,000 a year for a family. Now, that may not be as much as your gym

and your fitness class has cost, but that's the first time we've had that. In other cases, to be deductible, it would probably have to be medically necessary. You know, a doctor would prescribe it or something like this. So this is a bit of a breakthrough there. So that's beyond something like physical therapy.

It could be your yoga classes. Yes, it could, up to a point. That's a kind of a flashy change. Some of the other fundamental changes that are quieter will have a further reach. For instance, if you turn 65, you're probably going to be enrolled in Medicare Part A for hospitalization. That's pretty much automatic for everybody. And under current law, that keeps you from having a high-detectable plan with an HSA. That would change.

LESLIE KENDRICK When you're talking about these quieter changes, I can also see how one of the quieter changes that could have a really big impact is something you've reported on previously, how difficult it is to integrate HSAs with so-called Obamacare coverage. How is this bill proposing to change that? Well, this is important because it would say that the bronze Obamacare ACA coverage and also the catastrophic plan would qualify as HGHP, that is deductible plans and be eligible for HSA's and That's really good because those are the ones for people under 30

people who think they'll never be sick and maybe they won't ever be sick during that time and this would give them away into an HSA and Also have the cheapest coverage and maybe you would never be getting sick during that time But you would be saving that money in your HSA that could then grow later. That's exactly right. And as it is now, spouses can't combine their savings in a joint HSA. That's right. These are kind of like IRAs.

You know, it's yours and yours alone. And so one of the changes would allow spouses to make catch-up contributions. One thing that's a very important footnote, it's not the most important thing, but it's an important footnote, is that for many young people who are out on their own, they're not dependents on their parents return. There's this quirk that says if the parents have HSA coverage, the child can have HSA coverage as well. And you know, they're covered by their parents plan, but the child can have HSA coverage as well. And you know, they're covered by their parents' plan, but the child can have his or her own HSA

and put in a full amount. And it doesn't have to be from their own earnings. The parents could give it to them. So that if you're feeling generous towards your kids and you have this money, it could go into an HSA for them. It's a good thing for people to know about. You should read my coverage. We have links to stories explaining this. And the big asterisk on all of this is that this isn't approved yet. This is still in limbo. Can you tell us about when we'll know more and what's next?

Well, the Senate is getting to work right away and hopes to have something done soon. We don't know quite how that's going to work. But I will say there are 10 provisions affecting HSAs in a positive way and they have not been controversial. Not the way that SALT provisions for state and local tax deductions are controversial or green energy provisions are controversial. We don't know what's going to happen, but they probably have as good a chance as many. That's WSJ reporter Laura Saunders. And that's it for your money briefing. We'll be back tomorrow with WSJ's Jason Zweig

to discuss stock market FOMO. This episode was produced by Ariana Asparu with supervising producer Melanie Roy. I'm Julia Carpenter for The Wall Street Journal. Thanks for listening.