Continuing its drive to promote and expand Health Savings Accounts, the administration is proposing direct help for low income families who want to purchase and use HSAs.

The President also proposes giving low-income families a $1,000 contribution made directly to their HSA, along with a $2,000 refundable tax credit to help purchase a policy to cover major medical expenses.

• A family of four making $25,000 or less will be able to get $1,000 from the Federal government to put into their HSA. These families can use the money to pay for doctor visits, medicines, and other routine medical expenses. What the family does not spend in a year can be saved in the account and carried over into the next year, earning interest tax-free. Each year that the family remains eligible, the government will deposit another $1,000 into their HSA. The family—not the government and not the employer—owns the HSA and keeps it whether a family member changes jobs or increases his or her earnings. Low-income individuals could receive a $300 contribution to their HSAs.
  
  
• In addition to the $1,000 contribution to their HSA, the same low-income family of four will be able to get a $2,000 refundable tax credit to help them buy an insurance policy that covers them for major medical expenses. The $2,000 will cover a portion of the premiums on the insurance policy. Average premiums for family major medical coverage cost a little over $3,300 a year, according to the Kaiser Family Foundation based on data collected by eHealthInsurance. Low-income individuals could receive a refundable tax credit of about $700.
  
  
• Families who elect not to set up an HSA may use the refundable $3,000 tax credit to buy standard medical coverage instead. Individuals will be able to claim a $1,000 refundable tax credit.
  
  
• Low-income families will not have to wait until tax time to get their tax credits. The low-income health care credits will be advanceable and available to qualifying families when they need it.
  
  
• The President has also proposed $4 billion in grants to encourage states to create insurance pools to make sure low-income Americans get the most out of the credit. These purchasing pools will provide people an easier, faster way to shop for coverage."