Senators Propose Direct HSA Payments Amid ACA Tax Credit Debate

Two Republican senators have introduced legislation proposing direct deposits of $1,000 to $1,500 into Health Savings Accounts (HSAs) for Americans enrolled in the Affordable Care Act (ACA) who earn below 700% of the federal poverty level. This proposal comes as ACA tax credits are set to expire on December 31, potentially raising healthcare costs for approximately 23 million Americans. The plan targets improving affordability by redirecting funds from insurers to individuals, allowing them to use HSAs for qualified medical expenses, excluding abortion and gender transition services. The proposal also includes funding for ACA cost-sharing reduction payments to lower premiums, expands access to low-cost catastrophic plans, and reduces Medicaid funding for states covering undocumented immigrants. Democrats are advancing an extension of ACA tax credits for two to three years, but this faces Republican opposition and is unlikely to pass in the Senate. The Cassidy-Crapo bill reflects a Republican approach emphasizing direct financial assistance through HSAs rather than enhanced subsidies. Senate Republicans are reviewing competing proposals, including the CARE Act, which aims for a temporary extension and phased reduction of ACA premium tax credits. Senate GOP leadership continues discussions on a unified stance. The legislative outcome will affect insurance markets, premium costs, and healthcare affordability for millions of Americans in 2026 and beyond.