Health savings accounts: What are they, and how do they pay for healthcare?

The Affordable Care Act (ACA) marketplace is having a wild time lately.

The biggest, most obvious twist? Enhanced premium tax credits expired, to kick off the year. Enrollment dropped by 1.2 million and counting, per Centers for Medicare and Medicaid Services (CMS) data.

There was another important change, though, happening at the same time.

Millions more marketplace enrollees are now eligible to open health savings accounts (HSAs) thanks to a provision of the 2025 One Big Beautiful Bill (OBBB) Act that made all bronze and catastrophic marketplace plans eligible.

Wait, what’s an HSA?

HSAs are a type of personal savings account established in 2003 that allows people with high-deductible health plans to save money and collect dividends and interest without paying taxes. They’re similar to a health flexible spending account, or FSA, except all the savings roll over.

The catch: Account withdrawals must be for qualifying medical expenses or they can carry a 20% penalty, per the IRS.

It’s a deal a lot of people are willing to make. As of mid-2025, HSAs contained $159 billion across 40 million accounts, up 16% year over year, per data from investment solutions and research firm Devenir.

“We have seen tremendous growth in the space and in the number of accounts opened over the past couple of years,” Karen Volo, SVP and head of health and benefit accounts at Fidelity Investments, a major HSA provider, told Healthcare Brew.

A new twist

Because of the OBBB Act’s eligibility expansion, plus more people switching to higher-deductible plans amid rising healthcare costs, 43% of 23.1 million consumers who enrolled through Healthcare.gov are eligible for an HSA this year compared to 2% in 2025, per a January open enrollment report from the Centers for Medicare and Medicaid Services (CMS).

Volo said Fidelity is “definitely reaching out to those people who have marketplace access. Whether or not it shifts will be interesting.”

Kevin Robertson, executive managing director and chief growth officer at another one of the largest providers, HSA Bank, told Healthcare Brew the bank is “very aggressively attempting to raise awareness” to let individual ACA enrollees know they’re now eligible.

Still, though, the majority of HSA accounts are currently linked to employers (61% per Devenir), Robertson said.

“We’re absolutely seeing a significant increase of enrollments of individuals…now eligible because of bronze and catastrophic,” Robertson said. “Will it rival what the numbers are from employers? No, but it could someday.”

Getting some context

Not everyone agrees on whether HSAs will benefit ACA enrollees.

Matthew Fiedler, senior fellow with the Center on Health Policy at nonprofit research organization the Brookings Institution, told us he would be “surprised” if a large number of ACA enrollees opened up an HSA.

About three-quarters of marketplace enrollees in 2026 had incomes at or below 250% of the federal poverty level, per CMS open enrollment data, about $40,000 for an individual.

“The largest benefits are if you can leave the money in the account and let it build up over time,” Fiedler said. “Many marketplace enrollees are probably pretty cash-strapped in the now, so saving for the future may not be the highest priority for them.”

It can even be potentially “harmful” for low-income people to enroll in HSAs, Nicole Rapfogel, a senior policy analyst for marketplace and private insurance policy on the health team at think tank the Center on Budget and Policy Priorities, told Healthcare Brew.

Rapfogel pointed to a May 2024 Consumer Financial Protection Bureau release that states some HSAs come with “junk” charges like monthly maintenance fees. A September 2025 Government Accountability Office (GAO) report found providers waived monthly maintenance fees only “if accounts exceeded a certain balance,” such as a $3.50 maintenance fee being waived for balances above $3,000. Many accounts also require a minimum balance—like $1,000—before a user can start investing their savings.

The GAO report also found a greater proportion of high-income, Asian, white, and healthier people had HSAs.

The HSA industry has refuted these claims and reports.

“The reality is many of the ‘fees’ identified in the CFPB report either no longer exist or are not incurred by the consumer. For example, employers pay the monthly maintenance fees for the overwhelming majority of HSAs in the US,” Kevin McKechnie, executive director of the American Bankers Association’s HSA Council, said in a 2024 release.

People of all income levels and spending patterns benefit from the tax advantages of an HSA, Robertson added. 

“There was this old misconception that HSAs were opened and used only by the healthy and the wealthy,” he said. “They’re opened up and used by average Americans. These are not tax dodges for the rich.”

The average account had $3,997 as of June 2025, per Devenir’s latest data, a calculation that includes the approximately 19% of accounts with no money in them.

The future

Going forward, HSA companies and some politicians are pushing legislation that expands what HSAs can cover and allows them to be offered with all types of health plans, not just high-deductible ones.

Republican Sen. Roger Marshall announced on April 21 a law that would expand eligibility and allow a person to pay their insurance premium and healthcare sharing ministry expenses using HSA funds. This followed a proposal from House Rep. Aaron Bean, introduced in February, that would decouple HSAs from high-deductible health plan requirements.

There was also a proposal late last year to replace the now-expired expanded premium tax credits with direct cash payments to help consumers pay for coverage. The bill was rejected largely along party lines.

Rapfogel said HSAs are “more of a tax shelter than something that helps people afford and access care,” adding that she thinks policy efforts should take a different direction.

“A focus on…HSAs crowds out the opportunity for more meaningful policy that helps the low- and moderate-income people who are struggling to afford their healthcare,” she said.