1. Pre-Tax Contributions to your Health Savings Account

2. Health Savings Accounts Allow You To Budget

When it comes to health care, most people do not budget anything for it. Since health care is such a hard thing to budget for, most people do not account for it until it happens. With a health savings account, you can put away enough money to provide the medical expenses you need. Budgeting a small portion of your income to this makes sense and it will help you avoid large medical bills that you cannot pay.

3. Employer Match to you Health Savings Account

Depending on your employer, they might make a contribution to your Health Savings Account for you. This works much the same way as an employer-match program on your 401k. You contribute so much and your employer will match up to a certain percentage to put in your Health Savings Account. This is a great way to build up funds without investing that much of your own money.

4. Early Health Savings Account Distribution Penalties

A Health Savings Account is designed to save for health expenses only. If you take any of the money out for other reasons before you are 65, you will be penalized for it. In fact, you will have to pay taxes on the money and get hit with a 10% early distribution fee. This means you should stay away from this as a form of saving money for anything except medical fees.

5. Health Savings Accounts Give You More Control

When you have money set aside for your health care expenses, you are automatically given more control over the situation. Many people just go wherever they can go that is the cheapest because they have no money reserved for health care. When you put back enough money in your Health Savings Account, you can choose where you want to go based on treatment and service instead of money only. Getting the treatment you deserve should never be about money and a Health Savings Account can make that possible.

6. Anyone Can Get a Health Savings Account

Contrary to what many people might think, you don't have to be at an employer that offers Health Savings Accounts to get one. You can get one from a bank or any other financial institution. You can still contribute tax free and get all the benefits of a Health Savings Account regardless.

The Health Savings Account (HSA) coverage option has two components. The first component is a high-deductible health plan (HDHP). This is a major medical health insurance policy that has deductible options that meet guidelines established by law. Plans that meet the deductible criteria are considered to be "qualified" high-deductible health plans. There is an inflation factor whereby the deductible guidelines adjust on a yearly basis. These (HDHP) plans are considered comprehensive in the sense that all medical expenses large or small, even doctor visits and prescription drugs, are considered covered expenses and count towards the deductible.

It is important to note that there can be no benefits paid until the deductible is met on a qualified HDHP. For example, there cn be no doctor office co-pay or prescription drug co-pay. Having an up-front benefit of this type would violate the guidelines and disqualify the HDHP. It is important to note that preventative care or wellness benefits are allowed to be covered before the deductible on a qualified HDHP. For plans that use Preferred Provider Organizations (PPO), you also get the benefit of discounted pricing for all medical visits and procedures by a participating provider.

One unique and well accepted feature of the HDHP is that there is only one deductible for a family. This means that the deductible can be met by a single family member having a large medical expense or by all family members combining medical expenses. Once the deductible has been met, the entire family begins to have expenses covered. The expenses after the deductible can be covered at 100% or by a coinsurance percentage until a family maximum out-of-pocket limit is met.

Health Savings Account

The other component is a Health Savings Account (HSA). This is simply a qualified account for making deposits that can later be used for medical care. These accounts may be established with a bank, insurance company, credit union or investment company. The accounts must be "qualified" savings accounts and meet certain criteria established by law, therefore, it is important to verify that the account you are considering meets the qualifications. These accounts are interest bearing accounts and the funds can be accessed by debit card, writing checks or requesting a reimbursement of medical expenses paid. There are limits on the amount that can be contributed to an HSA each year:

2009 contribution limits
-single $3000
-family $5950
*$1,000 catch-up for 55 or older

2010 contribution limits
-single $3050
-family $6150
*1,000 catch-up for 55 or older

Here is the best part. Contributions to the HSA are deductible for tax purposes. This means that routine medical expenses, even things that are not covered under the medial plan such as dental, vision and over-the-counter medicines can be paid for with pre-tax dollars rather than after tax dollars.

The employees are being offered two Health Savings Account options:

One Health Savings Account plan has a maximum of $2,200 in yearly out-of-pocket costs for a single salaried employee, and $5,000 for a family.

The other Health Savings Account plan has a $1,300 out-of-pocket maximum for an individual and $3,100 for a family, but with a higher monthly premium.

GM has previously offered a version of the consumer driven plan for salaried workers, but starting in January all such employees must switch.

GM's 120,000 retirees and dependents will make a similar move to Health Savings Accounts, but their deductibles will be higher than those paid by active white-collar workers.

The automaker says it will deposit $1,300 per salaried employee into a Health Savings Account, to help them make the transition and pay out-of-pocket expenses.

According to recently released details, the monthly contributions, deductibles and out-of-pocket maximums paid by these retirees will be substantially higher than they pay now.

Like the plan for active salaried workers, some prescription drugs such as cholesterol medications are covered for retirees.

Most, however, aren't covered until retirees reach their out-of-pocket maximum, which is $3,500 for a single person and $7,000 for a couple or family.

Retirees will pay 20 percent of eligible expenses after their deductible is met, up to the out-of-pocket maximum; that rises to 40 percent if they use out-of-network providers. GM will pay all expenses after the out-of-pocket maximum is met.

GM is giving salaried retirees $260 a month until they turn 65 and qualify for Medicare. That money can be used for health expenses.

The automaker said last year that it would end health care coverage for Medicare-eligible retirees in 2009, and replaced it with a $300 monthly pension increase. Those under 65 were allowed to keep their coverage, with costs capped at 2007 levels.

No health care coverage is provided for salaried retirees who joined GM after 1993.

The new approach is intended, in part, to have people take greater responsibility for their own care.

Detroit's three automakers have sought to cut an annual tab for health care coverage that once topped $10 billion. In 2007, all three companies convinced the United Auto Workers to accept cash and company stock to fund a trust to pay for hourly retiree health care.

Their agents will continue to offer individual and businesses dozens of options in PPOs, HMOs, and other health insurance options, but next year the 5,000 employees of Blue Cross Blue Shield of FL will be required to go into a Health Savings Account with a high-deductible health insurance plan.

The Jacksonville-based insurer's leaders have become firmly convinced that an HSA plan makes sense because it requires workers to make their healthcare decisions -- and rewards those with healthy behaviors.

By law, Health Savings Accounts combine high-deductible health insurance plans with a tax-free savings account to which both employers and employees can contribute, similar to 401(k)s for retirement accounts. Unlike more common flex plans, Health Savings Account money can roll over year after year if not used.

Wagner says employees have two Health Savings Account possibilities: A $1,500 deductible with employees paying 10 percent co-insurance and a $2,500 deductible with a 20 percent co-insurance.

Critics of Health Savings Accounts say that their problem is that they assume consumers can make intelligent decisions about their healthcare when it's often difficult for most people to judge the costs and benefits of complex medical alternatives.

"They work well, especially for the healthy and wealthy," says Santiago Leon, a Miami healthcare insurance broker. "They work less well for the less healthy and less wealthy."

Health Savings Accounts also force people to make healthcare decisions when they don't have information. Leon points out that if a person is feeling symptoms that might be swine flu, he might delay treatment because he doesn't want to pay against his deductible or use his Health Savings Account dollars.

Wagner says such criticisms are unfair since Health Savings Accounts are built on a philosophy of informed decisions and wellness.

At Blue Cross, a key is for employees to fill out a risk-assessment survey, in which health basics like weight, blood pressure and cholesterol level are combined with behavior patterns like smoking and stress levels. Such surveys, becoming more popular among all employers, can lead to advice about diet and exercise, in an attempt to improve wellness and lower costs. Stressed employees might be advised to seek out the employee assistance program.

If employees fill out a risk assessment, Blue Cross will contribute $1,000 to the Health Savings Account. If they don't, the company match is $500. Employees can contribute their own money, in amounts depending on income based on guidelines from the Internal Revenue Service, Wagner said.

As its salespeople tell prospective customers, Health Savings Accounts are designed to make users smart consumers, since a percentage of their own money pays for almost all treatments.

The exception is some basic screenings -- such as mammograms and colonoscopies -- which the insurance pays for completely. Some other preventive measures, such as annual physical, involve co-insurance but not the deductible, says Wagner. That means if a person with the $1,500 deductible and 10 percent co-insurance had a $150 physical on Jan. 2, she would pay $15.

Wagner said there has been very little push-back from employees.

"Probably only three or four employees have raised concerns," he said.

Contrasting the Blue Cross HSA plan for employees with the offer of a wide variety in healthcare reform was "unfair," Wagner said. "We provide a good benefit" at a reasonable price.

In 2009, when the Health Savings Account was voluntary, about three-quarters of employees opted for the Health Savings Account, lured by the company match to the savings account. Wagner said that over several years, he has built up so much money in his health savings account, he planned next year to opt for the $2,500 option with 20 percent co-insurance because he could pay his portion with tax-free dollars.

Wagner said employee premium payments for 2010 had yet to be determined, but as in the past, they will be on a sliding scale, with top managers paying more and the lowest-paid employees paying less. In 2009, he noted, the lowest-level employee who completed a risk assessment paid nothing for the cheapest Health Savings Account.

More than 8 million people have over $10 billion in Health Savings Accounts as of November 2009. That figure is estimated to rise to over $70 billion within five years. Over a seventh of that money will be in balances large enough that the HSA administrator can offer mutual funds as an investment option. A typical Health Savings Account has $2,000 as the minimum for a mutual fund feature.

So some question: How can you lose? The Answer...

Early on Health Savings Account balances were handed off by health insurers to partner banks. Many paid risk-free interest rates of around 4%. Health Savings Account rates have since fallen by half. The fund option begins to look attractive. But there is a tendency for the fund choices to be based on who offers the best deal--to the plan's managers, not to participants. With your 401(k) your employer has a legal obligation to put your interests first. With Health Savings Accounts no such standard of care applies.

United Healthcare controls roughly 15% of the market for Health Savings Accounts, which it offers through OptumHealth Bank, a wholly owned subsidiary. Until late last year its HSA clients had 11 mutual fund choices from Vanguard Group. Annual fees ranged from 18 cents to 35 cents per $100 invested.

By late 2008 Optum had yanked the Vanguard options for new customers. Funds on the menu now hail from firms like Munder and Thornburg; fees range from 76 cents to $1.37 per $100.

Why the switch? No coincidence, perhaps, that regulatory changes this January enabled entities like OptumHealth and their consultants to start pocketing a cut of fund management fees. Nor, perhaps, is it purely random that many fund firms popping up in Health Savings Accounts these days kick back fees to plan managers. Vanguard does not pay kickbacks.

UnitedHealth, OptumHealth Bank and Remjeske, their consultant, decline to say how they divvy up fees. WellPoint, another Remjeske client, started offering HSA funds in April via two-year-old Arcus Financial Bank, with six of its seven Arcus funds paying such fees (two of which have since suspended payments because of market turbulence, Remjeske says).

"Revenue sharing doesn't even cover our recordkeeping," Remjeske pleads. "It only helps keep the cost down."

He's got a point. Given the paperwork, the puny balances most savers have in their Health Savings Accounts are hardly a gold mine. But whatever the economics at the moment, there's cause for concern about weak disclosure, lax legal oversight and high fees on savings that people are counting on to keep their pill bottles filled in old age.

The conflicts of interest can get pretty thick. Aetna and Cigna rely on JPMorgan Chase to select mutual funds for their HSA customers. The result: a stable of funds run mostly by--surprise--JPMorgan. Joseph Mondy, a Cigna spokesman, declines to comment on compensation between Cigna and JPMorgan. Aetna and JPMorgan are mum about their deal.

The good news is there's a way for some HSA participants to avoid this fee-palooza. Some insurers provide self-directed accounts to customers with certain minimum balances. Blue Cross Blue Shield HSA plans in Minnesota offer a Charles Schwab account for participants with at least $10,000 in their Health Savings Accounts. For a $10-to-$20 trading commission participants can buy low-cost exchange-traded funds. Alternatively, they can pay a sales load or a $5 fee to get into a mutual fund from a menu of funds costing 60 cents to $2.25 a year (per $100) in expenses.

Another risk is that Health Savings Accounts could be pared back before balances get big enough to make choices really important. Some Democrats argue that the tax break is a luxury for the healthy and wealthy. One proposal knocking around would limit pretax contributions from the current $5,950 to no more than each plan's annual deductible, which could be thousands of dollars less.

Starting this week, the House of Representatives will begin debate on the Affordable Health Care for America Act, and the Senate is expected to finish work on its version of health care reform shortly.

Both the House and Senate bills make major changes that would impact people with Health Savings Accounts:

- Both bills prohibit you from using any money in your Health Savings Accounts to buy over-the-counter drugs such as allergy medications that you now get without a prescription.

- The Senate bill may place a tax on high-value health plans, so-called "Cadillac" plans, by taxing the cost of such coverage, including employer contributions to your HSA.

- Both bills raise the penalty for the use of HSA dollars for non-qualified HSA medical expenses from 10% to 20% of the reimbursement.

It is important that you take the time to contact your members of Congress and let them know that you depend on your HSA for affordable coverage and the flexibility to set aside tax-free dollars to pay for your health care expenses.

Enter your zip code and find contact information for your member of Congress.

When contacting your member of Congress, here are some things to keep in mind:

- Over 8 million Americans currently have coverage through Health Savings Accounts – people should be able to keep the coverage they currently have.

- Going forward, people should be able to choose what works best for them – including the right to pick a health savings account that allows them to decide how best to spend their health care dollars.

- Employers that offer Health Savings Accounts should be allowed to continue to provide these benefits to their employees.

Thank you for your involvement and support. We need health reform that protects people with Health Savings Accounts. HSA for America will continue to keep you informed about issues relating to Health Savings Accounts.

In other words, if all Americans got Health Savings Accounts overnight, we would immediately begin saving about one-third of our health care spending, and would instead put that money away for when we need it most. The results...

Unfortunately, Health Savings Accounts and HSA Plans are also under the gun in the house bill released: Health Savings Accounts will have to shoulder a medicine cabinet tax. That means while you used to be able to buy over-the-counter medicines with tax-free account money, you’ll now only be able to use after-tax dollars. The bill raises the additional tax on non-qualified withdrawals from a Health Savings Account (raising the tax from 10% to 20%). Health Savings Accounts will effectively be killed by a final provision, which requires that most plans provide first-dollar coverage for most services.

So, while Health Savings Accounts could save the system, our government is instead trying to kill them without thought of consequence. Pelosicare would destroy one of the best aspects of the current system.

Tax-favored Health Savings Accounts are designed to help individuals pay for current qualified health care expenses and save for future medical and retiree health care expenses.

Employers found benefits to Health Savings Accounts, as well. Exactly 86% of those offering the option for more than three years indicated that plan costs were the same or less than the previous year. Almost all employers surveyed (96%) said Health Savings Accounts allow the company to continue offering group-sponsored health insurance.

The surveys were completed in the spring by Buck Consultants, an independent arm of ACS.

The surveys found that 84% of account holders said their HSA-qualified health insurance plans are affordable, and 72% said they pay the same or less than with a traditional type of health plan.

After moving to a Health Savings Account, more than half of account holders said they more closely monitor their health care costs, a finding that supports one of the key claims for how Health Savings Accounts ultimately save money.

Exactly 48% said they read their medical bills more closely, 46% have a better understanding of where their money goes, and about 40% more closely evaluate costs before electing medical services, according to the surveys.

A majority of HSA holders (81%) said the ability to personally control health care costs is an important factor that caused them to select an HSA.

Health Savings Accounts, which are designed to allow saving for medical and retiree health expenses, are savings accounts set up through banks. Proponents say they allow more flexibility in how workers use their health care funds, while critics say the accounts favor healthier and younger people.

At Dubuque Bank & Trust, senior vice president Doug Stillings says Health Savings Accounts are particularly attractive to small businesses.

"Health Savings Accounts give the employee much more flexibility in what they do with their health care money," Stillings said.

Users can access their Health Savings Account with debit cards and then save receipts to show they are for health care related expenses. There's no "use it or lose it" provision, so contributions carry over from year to year.

Dubuque Bank & Trust has offered Health Savings Accounts for three to four years, and Stillings said they have been growing in popularity among business owners.

At Great River Oral and Maxillofacial Surgery, about half of the employees now have Health Savings Accounts along with HSA insurance plans that are required to open a Health Savings Account.

"Health Savings Accounts allow a lot of flexibility for a healthy group or healthy individual," said Robin Zenz, office manager.

Zenz said the office has about 35 employees and the Health Savings Accounts have been implemented for about three years. An increasing number of employees have been signing up for the HSA Plans.

Stillings said he hasn't had any negative feedback on the program, but he admitted that Health Savings Accounts are not meant for everyone.

An article by the staff at Mayo Clinic on the health care provider's Web site said negative aspects of Health Savings Accounts are that older and sicker people pay more, they don't allow for the difficulty in budgeting for unpredictable illnesses and that the pressure to save money in Health Savings Accounts might keep people from seeking preventative treatment.

Stillings said he didn't want to predict whether proposed health care reform could change the amount of interest in Health Savings Accounts.

"There are so many unknowns in the health care world right now," he said. "If we continue with the type of structure we currently have, Health Savings Accounts will continue to gain popularity."

Today, Health Savings Accounts have replaced Flexible Spending Accounts as the preferred pre-tax dollar savings vehicle for healthcare spending. There are many more advantages to Health Savings Accounts which are more appealing to individuals and families.

Lawmakers in Washington are fighting over what to do with these accounts. The ability to be able to place pre-tax money into them makes them one of the most popular depositories for money that is used for medical expenses. Any ‘messing’ with this benefit will smell of a tax increase on the middle class.

On the other hand, there is one reason that you should get out of your flexible spending account if you have one: you use your money by the end of the calendar year or lose it.

Enter the Health Savings Account. This account is also pre-tax contributable and you can also contribute to it on a post-tax basis too. You do not give up your money in a calendar year, either. You keep it and it keeps accumulating in your Health Savings Account with interest until you use it.

Under the flexible spending accounts rules and guidelines, you are asked to provide receipts and proof of purchase for every little charge made on the account. It is watched like a hawk. Health Savings Accounts still have the restriction of only being used for medical expenses, but there are no hawks looking over your shoulder. Should you become the target of an IRS audit, however, you will need to provide receipts for all of your purchases for the year in question.

It is time for the flexible spending account to die slowly. And it would on its own as long as those who are still using them can get a better deal elsewhere – which is possible with a Health Savings Account.

The advent of Health Savings Accounts has been a bright spot in the health care arena for several years now, even in spite of the annual limits that one must adhere to when placing money into the account. Those who do have a better chance of being able to pay for unexpected medical events that occur in their lives. And that is peace of mind that is hard to come by right now.

Canopy found that the average individual Health Savings Account holder for the first quarter of 2009 was 42 years old and contributed $116 monthly, up slightly from an average monthly contribution of $111 for the fourth quarter of 2008. The average family Health Savings Account holder for the first quarter of this year was 45 years old and contributed an average of $239 monthly, up from an average monthly contribution of $206 for the previous quarter.

“Consumers enrolled in HSA plans demographically are very similar to consumers of traditional health care,” notes Canopy CEO Vik Kashyap. He also points out “the fact that consumers are clearly using these accounts for saving towards long-term care needs and even retirement.”

First-quarter 2009 average individual HSA balances totaled $960, up from $928 in the fourth quarter of 2008 and from $697 for first-quarter 2008, according to Canopy. Average HSA balances for families also rose, increasing to $1,720 in the first quarter of 2009 from $1,600 in the last quarter of 2008 and from $1,419 in first-quarter 2008.

This trend of increasing contributions, says Kashyap, is noteworthy. “The most significant thing we have noticed is that even in a recession economy, both employers and consumers continue to make contributions to and invest in Health Savings Accounts, which supports the contention that HSA products have become a key/integral component of employer-sponsored health care, and that contributions in many ways mimic those made to 401(k)s in which people invest a little bit each month into these accounts in an effort to accumulate long-term wealth/funds for long-term medical needs,” he tells ICDC.

According to Canopy, the average monthly HSA spend for individuals in first-quarter 2009 was $81, down slightly from $83.54 in the previous quarter. Likewise, the average monthly HSA spend for families was $103 most recently, down from $108.19. Spending on hospital services continued to make up a large amount of the spend for both individual and family Health Savings Accounts over both quarters. Other categories of reported spend include dental services, vision and lab/diagnostic tests.

“The most important take-away for employers is the dollar values held in Health Savings Accounts, and the fact that their employees are using these accounts not only as savings vehicles for long-term medical expenses, but ultimately towards retirement,” maintains Kashyap. “Additionally, as their employees increasingly use a Health Savings Account to manage their health care expenditures, they are becoming much more informed/empowered consumers of health care services, which will play a key role long term in reducing overall health care costs of an organization and the costs associated with managing employer-sponsored health care.”

The report is available at: www.canopyfi.com/hsametrics.htm

Most HSA plans offered by banks are limited to investments in bank-issued assets like CDs, with minimal returns. Investors have therefore expressed an interest in gold and precious metal investing and Entrust New Direction has responded with its new Golden Health Savings Account. Specially designed for ease of access, the New Direction Golden HSA opens the door to gold and other precious metals investments.

Longer term investments in an Health Savings Accounts were originally popular only for those who delayed healthcare-related withdrawals so they could maximize tax-free growth of the account. However, more HSA owners are discovering that their HSA is still full of cash after paying healthcare expenses and have expressed an interest in plans allowing gold investments. Clients believe investing in gold and other precious metals is a smart option as precious metals are relatively liquid compared to other hard assets and are available in small increments. Most importantly however, precious metals offer a potential hedge against inflation which is an important concern for most consumers.

The Golden HSA offers clients the ability to establish an automatic purchase plan with precious metals dealers of their choice. For investors interested in hands-off investment, the Automatic Golden HSA plan allows monthly, quarterly or annual automatic purchases of one type of coin or metal product, for a reduced transaction fee.

Golden Health Savings Accounts are not limited to gold and precious metals. Different fees apply for non-precious metals assets. Entrust New Direction does not provide investment advice nor sell any investments, including precious metals. The plan owner makes all investment decisions for the Golden HSA. All earnings are tax-free and can be used for any qualified medical expenses like doctor visits, laser eye surgery, medicine and many more health related expenses. Non-qualifying distributions are subject to tax and potential penalties. Gold and other metals must be stored at a depository.

"Unlike any other health plans, HSA deposits are tax-deductible and all the earnings are tax-free when used for qualified medical expenses. Some clients use the HSA money to immediately pay for medical expenses, but many account holders allow the funds to grow so they can pay for any future medical expenses which occur, including during retirement," concludes Wynne.

Tom Kennedy from J.F. Brennan Co. marine construction and Tom Brock from Altra Federal Credit Union said their firms have seen positive results with Health Savings Accounts. The two spoke at a forum sponsored by the Coulee Area Regional Employers, or CARE, Health Action Cooperative.

Brock said Altra made the switch in 2007. Under Altra's HSA plan, the company contributes $292 a month to each participating employee's Health Savings Account.

Unlike the current flexible spending plans, Brock said, there is no "use it or lose it" characteristic with a Health Savings Account, in which all the employee-contributed money must be spent by year's end.

Instead, employees can amass up to $5,950 a year.

Altra has a $6,000 family plan deductible. Once the deductible is reached, those in the plan then pay 20 percent of care costs up to a total of $10,000, after which the plan pays the full cost of care.

While the high deductible can be a shock for those not used to such plans, it's "not enough to create financial hardship for the family," Brock said.

And the Health Savings Account gives employees more flexibility, he said.

Healthy employees who do not have any costs for the year "are rewarded with a growing Health Savings Account," Brock said.

Altra has 240 employees locally, and 134 use the Altra health benefits. Of those, 74 percent have more than $1,000 in their accounts, 44 percent have more than $2,000, and 11 percent have more than $5,000, Brock said.

Claims for the first six months of 2009 are 40 percent less than the first six months of 2008, he said, adding that Altra's 2008 costs were virtually the same as in 2005, despite 10 more employees in the plan.

Kennedy noted similar experience at Brennan.

Critics of HSA plans point to the high costs, along with sometimes more paperwork.

High deductible health insurance plans might encourage consumers to skip basic and preventive care if companies don't offer incentives for those services, said Larry McNeely, federal health care advocate for the U.S. Public Interest Research Group, in a telephone interview from Washington, D.C.

"It's great that companies are doing wellness and having incentives to get preventive health care," he said. "But that doesn't mean HSA plans don't create an obstacle for going to the doctor when you need to go to the doctor."

Money in Health Savings Accounts can be used to pay for current health-care expenses, such as deductibles and co-pays, as well as to save on a tax-free basis for future medical expenses, such as Medicare premiums. To qualify for a Health Savings Account, investors need to be enrolled in an high deductible health insurance plan that meets certain criteria. This year those include a deductible of at least $2,300 for a family and $1,150 for individuals.

Not all HSA-qualified health insurance plans, in particular those sold to individuals and small businesses, would make the cut.

"It's a concern. We want the accounts to be viable going forward," says Kevin McKechnie, staff director of the American Bankers Association's HSA Council, which represents banks, insurance companies and their technology providers. More than 2,000 banks, credit unions and brokerage firms offer Health Savings Accounts.

About a third of people who have Health Savings Accounts were previously uninsured and HSA-qualified health insurance plans have grown in popularity among small businesses, the group most likely to drop coverage in recent years due to its cost, he adds. Premiums for these plans are lower than for traditional options.

Congressional committees have set the bar at varying heights for the minimum standards that coverage must meet. For instance, the House bill says that health plans must have an actuarial value of at least 70% - meaning the insurance covers 70% of health-care expenses. The Senate Health, Education, Labor & Pensions Committee sets the bar at 76%. A proposal by Senate Finance Committee Chairman Max Baucus released Wednesday implies a minimum of 65%.

Benefits consultants and industry experts say that HSA plans offered by large employers are likely to meet the criteria, because larger employers tend to offer more generous benefits.

But many HSA plans offered by insurers to individuals and small businesses are unlikely to make the grade. Roy Ramthun, president of HSA Consulting Services and a former senior health-policy adviser to President George W. Bush, estimates the actuarial value of these products ranges from 50% to 70%.

"The higher the bar is raised, the less likely these products will continue to be offered in the future," he says.

Banks and insurers want employees' contributions to be factored into the value. The maximum annual contributions to Health Savings Accounts this year are $3,000 for individuals and $5,950 for families.

Launched around six years ago, Health Savings Accounts were the cornerstone of the Bush administration's policy for making health care more affordable for American families. Many high-deductible plans cover some preventive care or prescription drugs before the deductible is met.

Health Savings Accounts are unpopular with Democrats. High-deductible health plans have lower premiums than more traditional plans, but enrollees must pay more out-of-pocket expenses before their insurance starts picking up the tab. (This year the maximum deductible for an HSA-qualified plan is $11,600 for a family). Such arrangements tend to favor the young and healthy, those who receive generous contributions to their Health Savings Accounts, and individuals who can afford to cover out-of-pocket medical expenses while fully funding their Health Savings Accounts.

Democrats resisted the introduction of Health Savings Accounts, which were created by the 2003 Medicare Prescription Drug Improvement and Modernization Act, describing them as an "unnecessary $16 billion subsidy" for the wealthy. Savings not needed to pay out-of-pocket medical expenses can accumulate in HSA for years, attracting the attention of firms seeking to manage these accounts.