Editor’s note: The following article is originally published by the Center on Budget and Policy Priorities (CBPP) on November 11, 2025 and is authored by Nicole Rapfogel, Senior Policy Analyst on Marketplace and Private Insurance Policy at CBPP. CBPP is a member of CHN.

Amid the urgent debate over whether Congress will act to prevent cost increases for millions of people in 2026 marketplace plans, some Republicans are promoting expansions of health savings accounts (HSAs). But expanding HSAs mainly benefits wealthier people and would do nothing to address impending premium increases for some 22 million people with low and moderate incomes who are facing higher costs. Instead, Congress should extend premium tax credit (PTC) enhancements to ensure enrollees continue to have access to affordable health coverage.

PTC enhancements, which 90 percent of Affordable Care Act (ACA) marketplace enrollees rely on to make premiums more affordable, are set to expire at the end of this year. Without legislative action to extend them, an estimated 4 million people will become uninsured and premium costs will rise for nearly all 22 million people enrolled in ACA marketplace plans.

Open enrollment began November 1 in most states, making now a critical time for Congress to protect access to affordable health coverage. Republicans have floated a shifting list of ideas in lieu of addressing the imminent price spikes, including some that would weaken or eliminate core elements of the Affordable Care Act, such as protections for people with pre-existing conditions. One would eliminate the tax credits altogether and give people a fixed sum of money instead of actual health coverage. These amounts would likely not be sufficient to cover premiums for comprehensive health insurance or to cover people’s health care needs if they were made to pay directly for their own care. (Details on this proposal are scarce.)

Expanding HSAs has been a consistent theme, including in the House-passed version of the Republican megabill, though those provisions didn’t pass the Senate. But these policies are misguided and would do little to preserve access to affordable, comprehensive coverage.

HSAs are accounts in which people enrolled in high-deductible health plans can elect to transfer pre-tax dollars into an account that they can withdraw from tax-free to pay for certain out-of-pocket health expenses. Enrollees cannot pay premiums using HSA funds.

HSAs provide the biggest benefits to people who can afford to contribute large sums into the accounts and who are in higher marginal income tax brackets. The accounts are triple tax advantaged: contributions lower taxable income, people can invest HSA funds and accrue earnings tax-free, and withdrawals are not taxable if used for “qualified” medical expenses. Enrollees can roll over HSA funds year-to-year and use any remaining funds for non-medical expenses after age 65.

In 2021, households filing tax returns with incomes of $1 million or more were the most likely to report individual HSA contributions. Just 4 percent of HSA contributions nationally in 2023 were made by people with incomes below $50,000. (See figure.) Meanwhile, 82 percent of marketplace enrollees had incomes below 300 percent of the federal poverty level ($46,950 for an individual).

HSAs also exacerbate racial wealth disparities. Latino and Black people with private insurance are half as likely to have HSAs than white and Asian people. In ZIP codes with disproportionate shares of Black or Latino households, HSA contributions are smaller and the accounts have lower balances, on average, than in ZIP codes with disproportionately white or Asian households. With Black and Latino people making up 42 percent of marketplace enrollees in 2023, HSAs would do little to improve marketplace affordability.

HSAs don’t improve health care affordability and would not offset the loss of coverage if Congress allows the PTC enhancements to expire. Most people do not have spare cash to set aside in HSAs; an estimated 4 in 10 people are in debt due to medical and dental bills.

People in lower tax brackets also benefit less from HSA tax savings. For example, a married couple making $800,000 saves 37 cents for each dollar contributed to an HSA, more than three times the 12 cents per dollar a married couple making $30,000 would save.

Further, HSAs do not promote efficient use of health care services. Research has shown that HSAs do not reduce health care spending, but rather shield more of that spending from taxes.

Some Republicans in Congress have proposed expanding HSAs to encourage enrollment in less comprehensive coverage. For example, the Republican megabill enacted in July made all bronze and catastrophic plans sold on the ACA marketplace eligible for HSAs. This provision doesn’t offer potential enrollees a good deal. When enrollees see higher premium costs for Plan Year 2026, eligibility for an HSA may make bronze and catastrophic plans seem like a better deal than if these plans weren’t eligible for an HSA; however, most marketplace enrollees do not have high enough income to contribute enough to HSAs that they could use the savings to pay high deductibles.

Other policies some Republicans have said they may want as part of any negotiation include boosting association health plans or direct primary care arrangements. These, too, may upset risk pools, cause confusion, and put individuals on the hook for higher costs.

Congress should instead focus on immediate efforts on extending PTC enhancements, a proven solution to increasing access to quality, affordable health coverage for the people most in need of help.