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    Obamacare Repeal: What May Replace It

    Health Savings Accounts continued...

    These accounts have been around since 2004. Today, nearly 1 in 5 people with work-based health insurance are enrolled in an HSA.

    A number of Republican plans would nearly double the maximum yearly amount of income you would be allowed to place in an HSA, which is currently $3,400 for individuals and $6,750 for families.

    In addition, Trump has said he intends to allow HSA funds to be used by any member of a family without penalty. They would also become part of a person’s estate and could be passed on to heirs without having to pay a death penalty.

    Pros: HSAs offer real tax advantages. The money you deposit goes in tax-free, which lowers your taxable income. Your HSA money also accumulates tax-free and can be withdrawn tax-free as long as it is spent on qualified health care costs.

    “They’re a great tax shelter,” Corlette says.

    Another argument for expanding the use of HSAs: Because they’re paired with high-deductible health care plans that require people to spend thousands of dollars before insurance kicks in, they become smarter health care shoppers by comparing prices and more carefully using health care services.

    Cons: The same argument for expanding HSAs -- that more people will face higher deductibles -- is also a common argument against them.

    According to Blumberg, this is another way of shifting the burden of high medical costs onto individuals.

    Critics argue that HSAs primarily benefit young and healthy people who don't use a lot of medical services. They also help those with high incomes who have the extra money to set aside and are more likely to benefit from the investment tax breaks. People with low incomes are unlikely to have the extra money to invest in these accounts, opponents say.

    And, a recent study found that nearly 3 in 10 people with low incomes enrolled in high-deductible health care plans paired with HSAs routinely spent more than 20% of their after-tax income on medical costs -- even when their employer contributed money to the account to help cover their expenses.

    In addition, people in lower-income brackets or who earn too little to pay federal income taxes (about $10,000 for an individual) receive no tax benefit from these policies.

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