Henry Aaron of the Brookings Institution has this to say regarding the significance of health savings accounts:
“. . .[T]he claims that HSAs will lower medical cost inflation and the fears that they will undermine coverage are probably overstated. But the larger point is that the appeal of HSAs should not be considered within the confines of company-financed health insurance, but in the larger context of total labor compensation. The principle effect of the new HSA provisions is to break down the distinction between health and pension benefits. Much retirement saving is devoted to paying for health care. HSA balances that remain unused during an employee’s working years may be used under extremely favorable terms to pay for health care during retirement, and they may be used on terms identical to those of tax-sheltered savings plans to pay for general consumption. Those options mean that HSAs are just defined contribution pension plans, with particularly advantageous tax treatment and particularly generous rules for withdrawal.
Thanks to RothCPA.com for the pointer.
The American Benefits Council has published its comments to the Internal Revenue Service regarding HSAs and Notice 2004-2.
A couple of helpful articles on HSAs: