More than 10 million people have a Health Savings Account (HSA) or a Health Reimbursement Arrangement (HRA) and these are the fastest growing products in the financial marketplace.  Withdrawals for nonhealth purposes are subject to taxes and penalties.  In order to encourage HSA growth, Congress explicitly made individual account holders responsible for accurately reporting taxable withdrawals on their income tax returns - just as they are responsible for reporting all other taxable transactions.  This is not the legal responsibility of the employer or bank issuing the HSA debit card. 

A proposal before the Ways and Means Committee would change all this.  It would force employers and financial institutions to collect paper receipts to verify the purpose of HSA expenditures - basically ending the paperless, electronic systems that are now in place.  See Roy Ramthun's analysis, attached as a comment. 

Jack Rowe (former Chairman of Aetna), Robin Downey (head of product development for Aetna) and Joe Newhouse (Aetna board member) have done a study of Aetna's CDHC plans.  Published in Health Affairs (which makes no mention of the Aetna connection for Rowe or Newhouse), the study (full text is gated) uses data not available to other researchers.  The authors' conclusion:  Aetna products work like a charm! 

(P.S. Joe Newhouse says affiliations appear at the end of the document, see comment.)