Health Savings Accounts as a Means of Saving for Retirement Health Care Expenses

Abstract

Under the Medicare Modernization Act of 2003, individuals with certain highdeductible health benefits during their working years are eligible to contribute to a health savings account (HSA). The theory behind these accounts is that by giving individuals more control over funds allocated for health care services, they will spend the money more responsibly, especially once they become more educated about the actual cost of health services. Furthermore, these accounts can be used as a tax-advantaged vehicle to save for health care expenses in retirement. They are not likely, however, to serve as a magic bullet for dealing with the nation’s challenge regarding health care costs.