Impact of HSAs on ACA Enrollment Post Premium Tax Credit Expiration

The expiration of enhanced premium tax credits has significantly impacted the Affordable Care Act (ACA) marketplace, leading to a decline in enrollment numbers by 1.2 million, according to the Centers for Medicare and Medicaid Services (CMS). Simultaneously, the 2025 One Big Beautiful Bill (OBBB) Act has extended eligibility for health savings accounts (HSAs) to individuals with bronze and catastrophic marketplace plans.

Since their inception in 2003, HSAs have enabled enrollees of high-deductible health plans to save money tax-free for medical expenses. These accounts, similar to flexible spending accounts (FSAs), allow funds to roll over annually, providing a financial safety net. However, withdrawals not used for qualified medical expenses incur a 20% penalty under IRS regulations, emphasizing the need for proper risk management.

Recent data from Devenir indicates a marked increase in HSA funds, which have reached $159 billion across 40 million accounts by mid-2025—a 16% growth from the previous year. Karen Volo, Senior Vice President at Fidelity Investments, acknowledged the substantial rise in HSAs due to expanded eligibility and a shift towards higher-deductible plans.

The CMS January open enrollment report highlighted that 43% of the 23.1 million consumers on Healthcare.gov are now HSA-eligible, a significant jump from 2% in previous years. Despite this growth, the majority of HSAs remain linked to employer-sponsored plans, encompassing 61% of all accounts, according to Devenir's statistics.

Kevin Robertson from HSA Bank noted that individual ACA enrollees are increasingly eligible due to new provisions, yet the scale of individual enrollments may not surpass employer-based accounts soon. While some, like Matthew Fiedler from the Brookings Institution, express skepticism about the effectiveness of HSAs for low-income enrollees, industry representatives highlight the broad demographic benefits, with many fees typically covered by employers.

Ongoing efforts aim to expand HSA applicability beyond just high-deductible plans. Legislative proposals are being considered to broaden eligible expenses and allow premium payments from HSA funds directly. Such developments could reshape HSA utilization within the ACA marketplace and beyond, offering potential benefits to a wider array of consumers.