KFF Health News: GOP-Supported Health Savings Accounts Fund Luxurious Saunas, Exclude Insurance Premiums
December 05, 2025
KFF Health News: Health Savings Accounts, Backed by GOP, Cover Fancy Saunas but Not Insurance Premiums
Health Savings Accounts (HSAs) allow individuals to use tax-free funds for various medical expenses, including eyeglasses, medical exams, and even a $1,700 baby bassinet or a $300 online parenting workshop. However, these funds cannot be used for essential items like baby formula, toothbrushes, or insurance premiums.
President Donald Trump and several Republicans are advocating for HSAs as an alternative to the expiring federal subsidies that have reduced insurance premiums for many Americans under the Affordable Care Act (ACA). Yet, the legal restrictions on HSAs raise concerns about whether expanding their use would genuinely benefit the low-income individuals who primarily rely on ACA plans.
The GOP’s proposals follow a recent change by the White House to broaden HSA eligibility for more ACA enrollees. This change could significantly benefit companies selling high-priced wellness products that can be purchased with tax-free HSA dollars.
Despite the push for HSAs, skepticism remains, even among conservative supporters, about the feasibility of implementing such a significant policy shift in a short time frame. The enhanced ACA subsidies are set to expire at the end of the year, and Republicans are still debating whether to extend them.
Douglas Holtz-Eakin, president of the American Action Forum, cautioned senators on November 19, stating, “The plans have been designed. The premiums have been set. Many people have already enrolled and made their selections. There’s very little that this Congress can do to change the outlook.”
Cassidy’s Plan
HSAs allow individuals facing high out-of-pocket health insurance costs to set aside tax-free money for medical expenses. For decades, Republicans have promoted these accounts as a means for individuals to save for significant medical expenses without increasing federal healthcare spending.
The latest GOP proposals aim to build on a change included in the One Big Beautiful Bill Act, which would make millions more ACA enrollees eligible for HSAs starting January 1. Republicans argue that instead of pandemic-era enhanced ACA subsidies, patients would benefit more from direct financial support for health costs through HSAs.
Although the White House has yet to release a formal proposal, early reports suggest it may include HSA contributions alongside temporary, more restrictive premium subsidies.
Sen. Bill Cassidy, a Louisiana Republican and chair of the Senate Health, Education, Labor, and Pensions Committee, has proposed directing federal funds into HSAs for some ACA enrollees. “The American people want something to pass, so let’s find something to pass,” Cassidy stated on December 3. “Let’s give power to the patient, not profit to the insurance company.” He believes a deal can be reached in time for 2026 coverage.
Democrats, who will likely be needed for any health care measure to pass, have criticized the GOP’s proposals. They advocate for extending the enhanced subsidies to help control premium costs for nearly 24 million Americans enrolled in the ACA marketplace, which is a larger group than the 7.3 million estimated to be eligible for HSAs.
Sen. Ron Wyden of Oregon, the top Democrat on the Senate Finance Committee, remarked, “HSAs can be a useful tool for very wealthy people, but I don’t see it as a comprehensive health insurance opportunity.”
Who Can Use HSAs?
The IRS imposes restrictions on HSAs, which are typically managed by banks or health insurance companies. They are available only to those enrolled in high-deductible health insurance plans, specifically bronze and catastrophic plans on the ACA marketplace. The annual contribution limits for HSAs will be $4,400 for individuals and $8,750 for families in 2026.
Flexible spending accounts (FSAs) work similarly but have lower contribution limits and cannot be rolled over year to year. The law governing HSAs prohibits using these accounts to pay for insurance premiums, meaning that without significant changes, the GOP’s proposals are unlikely to address the pressing issue of rising premium costs. Without congressional action, ACA enrollees are projected to pay 114% more out-of-pocket for premiums next year.
Even with government deposits into HSAs, many may still opt out of coverage upon seeing the increased premium costs. Tom Buchmueller, an economics professor at the University of Michigan, noted, “For people who stay in the marketplace, they’re going to be paying a lot more money every month. It doesn’t help them pay that monthly premium.”
Some individuals may be pushed into less comprehensive insurance coverage, as bronze plans come with the highest out-of-pocket costs.
An HHS Official’s Interest
HSAs can cover a range of routine medical supplies and services, including medical and dental exams and emergency room visits. The government has expanded the list of eligible purchases to include over-the-counter products like Tylenol and tampons. However, expenses for general health, such as gym memberships or food, are not permissible unless prescribed by a doctor.
As insurance deductibles rise, Americans are increasingly investing in HSAs. According to Morningstar, HSA assets grew from $5 billion two decades ago to $146 billion last year. Established by President George W. Bush in 2003, HSAs were intended to help families access affordable healthcare.
Currently, HSAs are most commonly utilized by wealthier individuals with employer-sponsored health insurance. With the One Big Beautiful Bill Act, even more funds are expected to flow into these accounts. Major retailers like Amazon, Walmart, and Target are developing online storefronts for HSA-eligible products.
Startups have emerged to facilitate quick approvals from medical providers for various items and services. Truemed, co-founded in 2022 by Calley Means, has become a significant player in this niche market, offering products like a $9,000 red cedar ice bath and a $2,000 hemlock sauna, all purchasable with HSA funds. Truemed’s CEO, Justin Mares, stated, “When given the choice, Americans choose to invest their health care dollars in these kinds of proven lifestyle interventions.”
Means joined the Department of Health and Human Services in November after previously working at the White House during the signing of the One Big Beautiful Bill Act. HHS spokeswoman Emily Hilliard clarified that Means would not personally benefit financially from the expansion of HSAs, as he plans to divest from his company.
By Amanda Seitz
KFF Health News is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF—an independent source of health policy research, polling, and journalism. Learn more about KFF.
December 05, 2025
KFF Health News: Health Savings Accounts, Backed by GOP, Cover Fancy Saunas but Not Insurance Premiums
Health Savings Accounts (HSAs) allow individuals to use tax-free funds for various medical expenses, including eyeglasses, medical exams, and even a $1,700 baby bassinet or a $300 online parenting workshop. However, these funds cannot be used for essential items like baby formula, toothbrushes, or insurance premiums.
President Donald Trump and several Republicans are advocating for HSAs as an alternative to the expiring federal subsidies that have reduced insurance premiums for many Americans under the Affordable Care Act (ACA). Yet, the legal restrictions on HSAs raise concerns about whether expanding their use would genuinely benefit the low-income individuals who primarily rely on ACA plans.
The GOP’s proposals follow a recent change by the White House to broaden HSA eligibility for more ACA enrollees. This change could significantly benefit companies selling high-priced wellness products that can be purchased with tax-free HSA dollars.
Despite the push for HSAs, skepticism remains, even among conservative supporters, about the feasibility of implementing such a significant policy shift in a short time frame. The enhanced ACA subsidies are set to expire at the end of the year, and Republicans are still debating whether to extend them.
Douglas Holtz-Eakin, president of the American Action Forum, cautioned senators on November 19, stating, “The plans have been designed. The premiums have been set. Many people have already enrolled and made their selections. There’s very little that this Congress can do to change the outlook.”
Cassidy’s Plan
HSAs allow individuals facing high out-of-pocket health insurance costs to set aside tax-free money for medical expenses. For decades, Republicans have promoted these accounts as a means for individuals to save for significant medical expenses without increasing federal healthcare spending.
The latest GOP proposals aim to build on a change included in the One Big Beautiful Bill Act, which would make millions more ACA enrollees eligible for HSAs starting January 1. Republicans argue that instead of pandemic-era enhanced ACA subsidies, patients would benefit more from direct financial support for health costs through HSAs.
Although the White House has yet to release a formal proposal, early reports suggest it may include HSA contributions alongside temporary, more restrictive premium subsidies.
Sen. Bill Cassidy, a Louisiana Republican and chair of the Senate Health, Education, Labor, and Pensions Committee, has proposed directing federal funds into HSAs for some ACA enrollees. “The American people want something to pass, so let’s find something to pass,” Cassidy stated on December 3. “Let’s give power to the patient, not profit to the insurance company.” He believes a deal can be reached in time for 2026 coverage.
Democrats, who will likely be needed for any health care measure to pass, have criticized the GOP’s proposals. They advocate for extending the enhanced subsidies to help control premium costs for nearly 24 million Americans enrolled in the ACA marketplace, which is a larger group than the 7.3 million estimated to be eligible for HSAs.
Sen. Ron Wyden of Oregon, the top Democrat on the Senate Finance Committee, remarked, “HSAs can be a useful tool for very wealthy people, but I don’t see it as a comprehensive health insurance opportunity.”
Who Can Use HSAs?
The IRS imposes restrictions on HSAs, which are typically managed by banks or health insurance companies. They are available only to those enrolled in high-deductible health insurance plans, specifically bronze and catastrophic plans on the ACA marketplace. The annual contribution limits for HSAs will be $4,400 for individuals and $8,750 for families in 2026.
Flexible spending accounts (FSAs) work similarly but have lower contribution limits and cannot be rolled over year to year. The law governing HSAs prohibits using these accounts to pay for insurance premiums, meaning that without significant changes, the GOP’s proposals are unlikely to address the pressing issue of rising premium costs. Without congressional action, ACA enrollees are projected to pay 114% more out-of-pocket for premiums next year.
Even with government deposits into HSAs, many may still opt out of coverage upon seeing the increased premium costs. Tom Buchmueller, an economics professor at the University of Michigan, noted, “For people who stay in the marketplace, they’re going to be paying a lot more money every month. It doesn’t help them pay that monthly premium.”
Some individuals may be pushed into less comprehensive insurance coverage, as bronze plans come with the highest out-of-pocket costs.
An HHS Official’s Interest
HSAs can cover a range of routine medical supplies and services, including medical and dental exams and emergency room visits. The government has expanded the list of eligible purchases to include over-the-counter products like Tylenol and tampons. However, expenses for general health, such as gym memberships or food, are not permissible unless prescribed by a doctor.
As insurance deductibles rise, Americans are increasingly investing in HSAs. According to Morningstar, HSA assets grew from $5 billion two decades ago to $146 billion last year. Established by President George W. Bush in 2003, HSAs were intended to help families access affordable healthcare.
Currently, HSAs are most commonly utilized by wealthier individuals with employer-sponsored health insurance. With the One Big Beautiful Bill Act, even more funds are expected to flow into these accounts. Major retailers like Amazon, Walmart, and Target are developing online storefronts for HSA-eligible products.
Startups have emerged to facilitate quick approvals from medical providers for various items and services. Truemed, co-founded in 2022 by Calley Means, has become a significant player in this niche market, offering products like a $9,000 red cedar ice bath and a $2,000 hemlock sauna, all purchasable with HSA funds. Truemed’s CEO, Justin Mares, stated, “When given the choice, Americans choose to invest their health care dollars in these kinds of proven lifestyle interventions.”
Means joined the Department of Health and Human Services in November after previously working at the White House during the signing of the One Big Beautiful Bill Act. HHS spokeswoman Emily Hilliard clarified that Means would not personally benefit financially from the expansion of HSAs, as he plans to divest from his company.
By Amanda Seitz
KFF Health News is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF—an independent source of health policy research, polling, and journalism. Learn more about KFF.
