What will happen to HSA and 529 Accounts if insurance and education laws change?

[onecoolcat]

I know no one knows for sure but does anyone have anecdotal evidence for what is likely to happen to these accounts if: 1) college becomes free and 2) Medicare for all becomes a thing?

[Dave1442397]

I don't know about 529s, but HSA accounts should end up like any other retirement account, ie taking the money out for non-medical expenses would make it taxable. You'd still have saved on taxes by having the HSA account in the first place.

I think that's unlikely, though. My parents have supposedly free healthcare (Ireland), but if they want a higher level of care (private room in hospital, not stuck on waiting lists for tests, etc) they have to pay a monthly premium, which they do. I know my father still pays a couple of hundred euros a month for prescription meds, too. I have a feeling we'll be needing our HSA money for medical expenses, no matter what.

[secondcor521]

From what I've seen, the government typically grandfathers these things and phases them out, even over very long periods of time.

So if what you suggest happens, I would expect that contributions to HSAs and 529s would be eliminated, and the associated deductions removed from the federal and state income tax forms.  The accounts themselves would continue to grow tax-free (except HSAs in CA and NJ and possibly a few other states, where they already don't get this treatment).  Withdrawals would continue to be treated as they are now.

Eventually - over a few decades - the accounts would fade out due to lack of new account openings and new contributions.

[mistymoney]

I wouldn't envision any changes to these. For college - only public institution will be free and how free will they be? books, room and board, laptop, etc. etc.

I jusst don't see completely tuition free in the next couple to 10 years, although greatly reduced would be great.

Same thing Medicare. retirees are paying for medicare now, and have coinsurance and/or copays. So, the HSA does not become obsolete. Other uses are dentistry & optometry including exams and treatments, braces, glasses or contacks, etc.

Many things may be not covered - plastic surgery (can you use HSA for that now?) or anything not deemed essential? non-generic drugs, LTC and or LTC insurance...

[WhiteTrashCash]

Insurance and education laws in the USA won't be changing any time soon due to the structure of our government under the Constitution. Despite strong public support, senators are opposed to making any changes, so they won't happen.

[Paul der Krake]

From what I've seen, the government typically grandfathers these things and phases them out, even over very long periods of time.

So if what you suggest happens, I would expect that contributions to HSAs and 529s would be eliminated, and the associated deductions removed from the federal and state income tax forms.  The accounts themselves would continue to grow tax-free (except HSAs in CA and NJ and possibly a few other states, where they already don't get this treatment).  Withdrawals would continue to be treated as they are now.

Eventually - over a few decades - the accounts would fade out due to lack of new account openings and new contributions.

For realz - US lawmakers love to grandfather things, not just for tax purposes. Building codes, environmental law, immigration law, it's everywhere. Something something reliance interest.