I received a letter today. The bank holding our health savings account (HSA) funds reminded us we will pay upwards of 30 percent more for my over the counter medications as of Jan. 1, 2011. Obama lied, he said taxes would not go up for any family making less than $250,000 per year.
We’ve told you about this in the past (multiple times), but since many readers will receive similar letters concerning their HSAs in the coming weeks, it was time for a reminder. A scan of the letter I received today (click to enlarge) includes the following reminder.
I’m not going into details concerning the OTC medicines my family use every day to make our lives better, but anyway you look at this, the health care legislation will result in an immediate increase in the price we pay for these items. As noted, if we go to our physician and get a prescription for, let’s say Excedrin, the government will allow us to use our HSA funds.
Pretty stupid huh?
The Obama administration will argue this was a tax cut they could no longer afford to pay for. Nice attitude Zero.
I’ll quote from my previous post.
HSAs – before ObamaCare – allowed individuals to put aside money to pay for qualified medical expenses – including over-the-counter (OTC) medications – on a tax free basis. Frequently, companies match or at least contribute to an employee’s HSA. (Unlike FSAs, you are able to keep the money year to year and even invest the money!)
This benefit has changed. (Sec. 9003 of H.R. 3590)
When this portion of the legislation becomes law (early 2011), you will no longer be able to pay for OTC medications with HSA dollars. Since HSA money was directed into your account tax free, this means you will soon be paying 25 to 40 percent* more for Ibuprofen, Tylenol, Excedrin, Sudafed, TheraFlu, Robitussin, Sinutab, Actifed, Tavist D, Vicks 44M, Dayquil, Nyquil, Tums, Alka-Seltzer, Neosporin, Pepto-Bismol, BenGay and your Breathe Right strips (among many others) if you pay for these OTC items using HSA dollars.
The government gave us this tax break more than six years ago, and they took it away. That equals a tax hike in my book, and it’s a direct tax hike for me … we have an HSA and use the debit card to pay for some of the items listed above. We don’t make anywhere near $250,000, so Obama lied, my taxes are going up.
As a second reminder, it gets worse for many other families who have and use Flexible Spending Accounts (FSAs) to pay for ongoing expenses. Beginning in 2013, you’ll be limited to a maximum contribution of $2,500 per year into your FSA account. Unlike HSAs, FSAs are “use it or lose it” accounts and are well-suited for families with ongoing health care expenses during the year.
Previously, the government placed no limit on the amount of tax-free dollars you could place in an FSA (many employers did have a limit). This allowed families who may have ongoing expenses – as an example $100 per week for special-needs child care – to save upwards of $1,000 per year in taxes. That “break” is gone for these families. Gone.
These changes don’t much matter to the super-rich do they? The most serious effects will happen to families making less than $250,000. Obama lied.
How do these changes make health care more affordable?
It’s just starting. The primary open enrollment season is starting now, and employees will soon find their premium contributions will be going up at a faster rate than before. If their premium contribution is not too bad … check out the benefit reductions. This is not a choice by insurance companies, this is specifically a choice made by employers … remember that.