Health Savings Accounts Could Cure Cost Crunch for Older Adults

Bipartisan lawmakers are striving to lower out-of-pocket medical costs for seniors without requiring a systemic overhaul of the entire Medicare system, reports Quin Hillyer in the Washington Examiner . The Health Care Savings for Seniors Act would cut such costs by 25 percent by revising Medicare rules, which currently prevent recipients from continuing to contribute to, or start, health savings accounts (HSAs). The elimination of this restriction would allow out-of-pocket costs to be treated on a pre-tax rather than post-tax basis. For seniors paying the approximate average of about $6,000 in such medical expenses annually, the result if their effective income-tax rate is 25 percent would be a savings of $1,500 per year. Hillyer points out that this reduction could particularly benefit women, who usually earn less over their lifetimes. "With 58 million people on Medicare, and with many of their health expenses subject to deductibles or restrictions, this simple switch of making HSA contributions allowable for Medicare recipients would substantially reduce the cost-crunch they face," Hillyer concludes. "Moreover, as HSAs are accounts they actually own, rather than being controlled by the insurance company or the government, these savings options would be inheritable by the seniors' families once their lives eventually end."