Health Care–Related Savings Accounts, Health Care Expenditures, and Tax Expenditures

Abstract

Importance Approximately 30% of US families with employer-sponsored health insurance, disproportionately drawn from high-income groups, benefit from flexible spending accounts (FSAs) or health savings accounts (HSAs). The combined association through both out-of-pocket spending and premiums of these tax-favored accounts with health care expenditures and tax expenditures remain uncertain. Objective To compare the health care and health-related tax expenditures among families holding FSAs, HSAs, or neither type of account. Design, Setting, and Participants This cross-sectional study used family-level data from the Medical Expenditure Panel Survey from January 1, 2011, to December 31, 2019, and conducted regression models, controlling for demographic and socioeconomic characteristics, chronic conditions, prior health care expenditures, and marginal tax rates to analyze how holding tax-favored accounts is associated with families’ health care spending and tax expenditures. The sample was restricted to families included in the survey for 2 years, with no members 65 years or older, and with at least 1 policyholder covered (only) by full-year employer-sponsored insurance. Data were analyzed from December 1, 2023, to April 30, 2024. Exposures Holding FSAs or HSAs. Main Outcomes and Measures Out-of-pocket and insurance-paid health expenditures overall and by service were measured. Health-related tax expenditures were based on tax-excluded insurance premiums and tax-sheltered out-of-pocket expenses. Results Of the 17 038 families included in the study sample, 2628 held FSAs (weighted 17%) and 1845 (weighted 13%) held HSAs. In regression-adjusted models, families with FSAs spent a mean of 20% or $2033 (95% CI, $789-$3276) more on health care annually than non–account holding families, largely due to increased insurer-paid expenses. Families with HSAs spent a mean of 44% or $697 (95% CI, $521-$873) more on out-of-pocket expenditures and had insignificantly higher insurance-paid expenditures than families without accounts, resulting in overall expenditures comparable to those of non–account holders. The additional tax expenditures associated with FSAs were a mean of $1306 (95% CI, $536-$2076) annually per family. Both types of funds were associated with significant increases in tax expenditures from additional office-based visits ($445 [95% CI, $244-$645] for FSAs and $174 [95% CI, $11-$336] for HSAs), outpatient visits ($330 [95% CI, $132-$528] for FSAs and $250 [95% CI, $15-$485] for HSAs), dental visits ($180 [95% CI, $126-$233] for FSAs and $165 [95% CI, $104-$226] for HSAs), and vision care ($36 [95% CI, $28-$45] for FSAs and $52 [95% CI, $40-$64] for HSAs). Conclusions and Relevance Participation in FSAs is associated with higher health care expenditures and tax expenditures, while HSAs are not associated with reduced expenditures. Tax policy could be better targeted to enhance insurance coverage and health care accessibility.