Health savings accounts: issues and implementation decisions for states.

Although HSAs were legislated through a federal initiative, the availability of qualifying high-deductible health coverage depends partly on states. As the primary regulators of health insurance, states can choose whether to allow insurance companies to sell high-deductible policies. This issue brief covers the key issues that state officials need to know about HSAs—including what they are, how they compare to other types of tax-preferred accounts, and what public policy implications and implementation issues need to be considered. Tax Benefits, Eligibility, and Use of Funds HSAs are tax-free accounts that can be set up by individuals or employers; they are personal accounts that are owned by individuals, even when employers establish and contribute to them. Interest earned is not taxed, and funds that are not used may carry over to the following year. (See Table 1 on p. 2 for a summary of HSA terms and provisions.)