New research has shed light on the current state of affairs in the HSA world. As noted, the pace of HSA formation has picked up. A survey by the industry group “America’s Health Insurance Plans” (AHIP) found 28 percent of the nearly 400,000 HSAs in existence at the end of 2012 were established that same year. In fact, the number of total accounts had nearly doubled from just two years prior.
HSA contributions, which can be made both by employees and employers, are tax deductible, earnings on saved amounts are also not taxed, nor are the funds taxed when withdrawn to pay for eligible medical expenses. Eligible expenses include long-term care insurance premiums, COBRA payments and health insurance premiums when individuals are collecting unemployment compensation.