Is there a Relationship Between Health Conditions and Owning an HSA or HRA?
Haverford College. Department of Economics
Place of Publication
Table of Contents
HSAs were introduced in 2003 by Congress in the Medicare Prescription Drug, Improvement, and Modernization Act (National Conference of State Legislature, n.d.). HRAs were formally defined in 2002 by the IRS in Notice 2002-45 and Revenue Ruling 2002-41(Lindquist, 2012). Both HSAs and HRAs offer tax-incentives to help individuals save for medical expenses. This thesis tests if there exists a relationship between individual health conditions and owning an HSA or an HRA. Using data from the National Health Interview Survey (NHIS), this thesis empirically tests the research questions and finds that there is no significant relationship between having health problems and owning an HSA or an HRA for the overall survey population. However, after estimating this relationship within income groups, this study finds a correlation between an individual's health and owning an HSA or an HRA. This thesis also finds that there exists a correlation between health problems and choice of insurance policy. The main policy implication of this study is that HSAs and HRAs are primarily used by higher income groups. If policy makers want to make an impact on lower income households, HSAs and HRAs need to be restructured to target this demographic.