Welcome I'm Anastasia Yuglova and this is the Cato Daily Podcast for Friday, December 22nd.

In preparation for the new year, the outgoing Congress has passed legislation that was signed

into law by the President on Wednesday, increasing the maximum annual contribution

that can be made to one's health savings account.

We'll talk to Director of Health Policy Studies Michael Cannon today about what this means for

Americans.

What's in the new HSA amendments for 2007?

Well, as part of its last-minute legislative blitz at the end of 2006,

Congress enacted some changes to the current rules for health savings accounts.

Part of those changes were an increase in the amount that people can contribute tax-free

to a health savings account.

As you know, a health savings account is a tax-free account that can be combined with high deductible

insurance so that you can put money into your health savings account tax-free and that can cover

your medical expenses up to your insurance policies deductible.

Well, the rule used to be that you could put in to the health savings account as much money as you needed to cover that deductible.

But in 2007, Congress will let people put more money into

their health savings account so that if you have a deductible of say $1,500 you

could still put in $,850 dollars into your health savings account, whereas in

2006 you would have been limited to that $1,500 because that was the amount of your

deductible. The long story short is that a lot of people are going to

be able to put more money, tax-free into their health savings accounts, and

that's going to make that type of insurance more attractive to people.

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