« Terrorist Attempt Update: Bomb Was Incendiary, Comprised of Mixed Liquids; Obama Only Notified Three Hours After Incident | Main | Music to Interrogate By »
December 26, 2009

ObamaCare Restricts FSAs, HSAs

Since 2003, consumers could use pre-tax dollars in flexible spending accounts and health savings accounts to buy over-the-counter drugs. And we're not talking about a meaningless few. In fact, I bet most of what's in your medicine cabinet right now is on the list (PDF). The OTC rule translated to hundreds of dollars in savings each year for consumers with an FSA or HSA.

I have a small FSA through work and because I never go to the doctor, I use that money almost entirely for paying for things like Claritin, Tylenol, Neosporin, bandages, and Tylenol PM. If ObamaCare passes, no longer.

But Section 9004 of the [] Senate bill and Section 531 of the House bill that passed in November changes the tax code so that “distribution for medicine” from HSAs and FSAs are “qualified only if for prescribed drug or insulin.” Yes, the bills are merciful enough to allow diabetics to purchase insulin under these tax plans, but if you or your family members need Pedialyte, prenatal vitamins or numerous other over the counter health items, you will see a tax hike that could be huge.

Since HSAs and FSA contributions are exempt from both income taxes and 15.3 percent payroll tax for Social Security and Medicare, and since these together can reach more than 40 percent of an employee’s salary, the effective tax increase on these medicines could be more than 40 percent.

And this tax change will almost certainly cost the health care system billions more dollars in unnecessary spending both to the government and private insurance plans. The Joint Committee on Taxation estimates that the tax hike will bring in $5 billion in revenues over ten years – itself a drop in the bucket when compared to the bill’s new trillion-dollar entitlement – but that estimate doesn’t take into account behavioral changes as a direct result of this provision.

OTC drugs are much cheaper those available for prescription, but they could now be more expensive to individual consumers given that prescription drugs would still be eligible for favored treatment in the tax plans, and that insurance companies would be mandated to cover many of them. Consequently, any time a consumer has the slightest headache, the financial incentive would often be to see a doctor and get a prescription rather than go to the store and get medicine off the shelf.

In other words, Obama is bending the cost curve...up.


digg this
posted by Gabriel Malor at 12:10 PM

| Access Comments




Recent Comments
Deplorable Jay Guevara [/i][/b][/s]: "[i]I've been visiting Drudge less not because NewA ..."

DocJ: "Wasn't pageant-lady also claiming that DJT groped ..."

Brother Cavil, Abbot of St. Costello-on-the-Hurlingbone: "[i]Why isn't refueling in space more discussed? Se ..."

Lindsay Vonn : "Ow, my back. ..."

Duncanthrax: "[i]The question is not how much Diet Coke should T ..."

Roc Ingersol : "Ion propulsion. ..."

runner: "She was wearing a bathrobe and he looked at her in ..."

moki: " Fact of life: if you're backstage in theater, ..."

Marcus T: "I just spoke with someone who was there on his way ..."

Willford Smith: " Going back to the moon would teach us how to do ..."

garrett: ">>"What's a life coach?" >>It's like a thera ..."

Deplorable Male Logic: "  She was wearing a bathrobe and he looked a ..."

Recent Entries
Search


MuNuvians
Polls! Polls! Polls!
Frequently Asked Questions
The (Almost) Complete Paul Anka Integrity Kick
Top Top Tens
Greatest Hitjobs

The Ace of Spades HQ Sex-for-Money Skankathon
A D&D Guide to the Democratic Candidates
Margaret Cho: Just Not Funny
More Margaret Cho Abuse
Margaret Cho: Still Not Funny
Iraqi Prisoner Claims He Was Raped... By Woman
Wonkette Announces "Morning Zoo" Format
John Kerry's "Plan" Causes Surrender of Moqtada al-Sadr's Militia
World Muslim Leaders Apologize for Nick Berg's Beheading
Michael Moore Goes on Lunchtime Manhattan Death-Spree
Milestone: Oliver Willis Posts 400th "Fake News Article" Referencing Britney Spears
Liberal Economists Rue a "New Decade of Greed"
Artificial Insouciance: Maureen Dowd's Word Processor Revolts Against Her Numbing Imbecility
Intelligence Officials Eye Blogs for Tips
They Done Found Us Out, Cletus: Intrepid Internet Detective Figures Out Our Master Plan
Shock: Josh Marshall Almost Mentions Sarin Discovery in Iraq
Leather-Clad Biker Freaks Terrorize Australian Town
When Clinton Was President, Torture Was Cool
What Wonkette Means When She Explains What Tina Brown Means
Wonkette's Stand-Up Act
Wankette HQ Gay-Rumors Du Jour
Here's What's Bugging Me: Goose and Slider
My Own Micah Wright Style Confession of Dishonesty
Outraged "Conservatives" React to the FMA
An On-Line Impression of Dennis Miller Having Sex with a Kodiak Bear
The Story the Rightwing Media Refuses to Report!
Our Lunch with David "Glengarry Glen Ross" Mamet
The House of Love: Paul Krugman
A Michael Moore Mystery (TM)
The Dowd-O-Matic!
Liberal Consistency and Other Myths
Kepler's Laws of Liberal Media Bias
John Kerry-- The Splunge! Candidate
"Divisive" Politics & "Attacks on Patriotism" (very long)
The Donkey ("The Raven" parody)
News/Chat
Archives
Powered by
Movable Type 2.64