Bill to Improve Health Savings Accounts for Medicare Users Comes With a Big Downside

The proposed Health Savings for Seniors Act would allow older Americans to deposit money in health savings accounts (HSAs) even after they enroll in Medicare, but they would be unable to tap that money to cover Medicare premiums, reports CNBC . Furthermore, consumers would be charged a penalty for making withdrawals for non-qualified medical costs. "Allowing seniors the choice to have a health savings account will help them pay for the out-of-pocket costs Medicare doesn't cover — like dental, vision, and hearing expenses — and allows them to do so with pre-tax dollars," said Kevin McKechnie with the American Bankers Association's Health Savings Accounts Council. The Kaiser Family Foundation estimated that only 18 percent of all adults with employer healthcare coverage said they were enrolled in a high-deductible plan paired with an HSA. Forty-seven percent said they contributed less than $1,000 to their account in the past year, and 11 percent contributed more than $5,000.