Senate Republicans Propose Health Savings Account Payments Over ACA Subsidy Extension

Senate Republicans have introduced legislation proposing direct payments to Americans' health savings accounts (HSAs) to cover health expenses, offering $1,000 to $1,500 depending on age, as an alternative to extending Affordable Care Act (ACA) enhanced premium subsidies.

This proposal, unveiled by Senators Mike Crapo and Bill Cassidy, aims to replace the expiring COVID-19-era tax credits that currently reduce health insurance premiums for millions under the ACA. The Senate is set to vote on this Republican plan alongside a Democratic proposal that would extend the ACA's enhanced premium tax credits for three years.

The Crapo-Cassidy bill targets individuals enrolled in ACA bronze or catastrophic plans who earn up to 700% of the federal poverty level, depositing funds in their HSAs in 2026 and 2027. Republicans argue that sending money directly to consumers rather than insurance companies will empower patients and reduce health insurance costs. However, the proposed HSA deposits fall significantly short of covering average deductibles, which are projected to exceed $7,400 for bronze plans in 2026.

Health policy experts highlight that while the direct payment model may benefit healthy individuals with minimal medical expenses, it risks leaving those with chronic conditions facing substantial out-of-pocket costs. HSAs, typically paired with high-deductible health plans, allow tax-advantaged savings for medical expenses but require consumers to manage higher upfront costs before insurance coverage applies.

This legislative effort aligns with former President Trump's advocacy for direct patient payments as a method to increase consumer bargaining power in the healthcare market. Analysts warn that without extended premium subsidies, over 22 million Americans currently benefiting from ACA support could see their insurance costs double starting in 2026. Meanwhile, employer-sponsored insurance continues to cover the majority of working-age Americans, with rising family plan costs outpacing wage growth.

The ongoing Congressional debate underscores a critical division in addressing health insurance affordability, juxtaposing direct-to-consumer funding mechanisms against enhanced premium support. These proposals come as nearly half of U.S. adults express concern about their ability to afford necessary healthcare services in the coming year. This dynamic environment highlights key challenges in balancing healthcare access, cost control, and consumer financial protection in U.S. health insurance policy.