For nearly two decades, health savings accounts (HSAs) and the associated tax advantages have helped people save money on their health care expenditures and grow wealth for future health care expenses. HSAs also play a role in producing a better health care system through more cost-conscious consumers and more providers motivated to improve efficiency. While HSAs are extremely valuable, they cannot be used for most health insurance premiums. Fortunately, a new rule from the Trump Administration permits employers to utilize health reimbursement arrangements (HRAs) and use tax-preferred dollars to reimburse employees for premiums for individual-market coverage they purchase. This rule, which took effect on January 1, 2020, has the potential to significantly expand employees’ control over their health insurance since most employers that offer health benefits only provide a single choice of health plan. An HSA-compatible individual-coverage HRA will maximize employees’ control over their current and future health care needs and will improve overall health policy in the United States.
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