Obamacare’s “prescription” mess
We are now some three months into Obamacare’s new rules concerning Health Savings Accounts, or HSA’s. We told you about the new rules shortly after they took effect, and, now we can report the outcome. It isn’t pretty.
HSA’s are used by millions of Americans as a way to pay for health care with before tax dollars. Typically, the money you decide to put into your HSA is deducted from your pay check by your employer and placed into a special account. You are usually given a debit card, and, then for example, when you go to your local drug store to purchase over the counter medicine, you use your debit card for payment.
Critics say the accounts encourage overconsumption of medical services. Since consumers typically must forfeit unused funds by year’s end, they often ended up scrambling in December to drain their funds by loading up on aspirin, antacid and the like.
To solve this critical problem, Obamacare now mandates that you can only use your HSA for drugs if you have a doctor’s prescription for said drug. So, it comes a no surprise that Americans are now calling their doctors to ask for a prescription for aspirin, or NyQuil, or Prilosec.
But,
[some] malpractice insurers are now urging doctors not to write any prescription without seeing the patient in person…
So, your $2 bottle of aspirin now costs $2 plus your copay for a visit to your doctor, that is, if you are willing to go to all that trouble.
Beyond that, the law is creating real problems for pharmacies.
Thousands of over-the-counter products now must pass behind the pharmacist’s counter when the customer pays with the special debit card.
‘At the moment it’s considered a prescription, it’s subject to all the regulatory requirements,’ says Mike DeAngelis, a spokesman for CVS. ‘It runs through our quality assurance process. We have to generate a label.’ The chain also puts each of the prescribed drugs in an individual paper bag.
The good news, though, in our march toward deficit neutrality, the CBO has estimated that this program will generate $5 billion in additional tax revenue…over 10 years. Most, if not all, of that will come from those who can little afford it.
Gee, if “end of the year” aspirin hoarding was such a serious problem, wouldn’t it have made more sense to allow unused HSA funds to roll over into the next year?
Oh, sorry, that would have been a logical solution.
Oh, SOS, you're so funny…logic? This is money: dollars & cents, not dollars and sense. Because some people who weren't following the changes in HSAs and FSAs that were brought about by O-Care, they continued with their s.o.p. with their payroll deductions not really understanding how this would affect their medical expenses. Am I incorrect to believe that at the end of this year, the gov. is going to have a windfall thanks to unused HSA and FSA funds that don't rollover to 2012?
Thanks to you, Jim & Steve and the hard work you did informing us of changes that would affect us, we made the right choice to ditch our FSA.
I hope this little perk goes away. Why should some of you get a pre-tax break, and I should pay w/ after-tax money for my health care costs since I do not have a nice payroll deduction for the HSA?. I suppose I will read an answer on this blog.
In response to sammy22: You'd be eligible for this pre-tax break if you paid into your own HSA " with a nice payroll deduction" from your own paycheck! If you don't have an HSA then you don't need to fund one, do you? What's so difficult here?
A little clarification is in order. As far as I understand, although the change regarding purchases of OTC drugs applies to both FSA and HSA, one major difference is that the funds in a HSA are allowed to roll over from year to year without a problem and without a loss of funds. A FSA must be used completely bu the end of the year or the money is forfeited. Anyone know something different?
Mathlady, You are correct. I sold HSA's and was trained numerous times on this. If you had an HSA you were allowed to roll the money over. This was not to be confused with the old MSA (Medical Savings Account) which were not allowed to roll over. You could only use the money in your HSA for medical expenses but OTC drugs were allowed, bandages, and things even remotely connected to medical expenses. Since these were written by the Govt. under George Bush (may I add), there was a govt. website which explained the whole procedure. I always gave my clients the link to this because it answered every question. Another benefit was that some plans like Golden Rule had HSA's attached to their plans they paid 4% interest on the money in the HSA and at the time this was higher than most banks were paying on a Savings Account and it was tax-free money until Medicare when you could no longer have your HSA, When you withdrew the money you paid a income tax on it. The idea being that your income level would be lower at this time. I have tons more to say praising them, but I've already bored you enough.
You're kidding about using the HSA card to pay for aspirin, aren't you? Have we gone so far down the group think nanny collectivist road that we would not pay cash for a bottle of aspirin? What happened to the concept that medical decisions and some medical costs are the responsibility of the person involved without a government regulated control intervening or impeding minor treatment? Good grief!
They were using their own funds to buy OTC medications. The HSA dollars are pre-tax and you put that into a savings account that can only be used for qualified medical expenses.
The changes in the health care legislation to FSAs and HSAs screwed over a lot of families and I've documented it here on the site. I know two families who have special needs kids and were suing FSA dollars (pre-tax) to fund monthly at-home care. Because the FSA limit was reduced to $2,500, one of those families will experience a $1,000 increase in taxes for 2011.
PV I thought the HSA was your own. If you want to use it for over the counter then thats your deal.
The problem is not healthcare; but, the pharmacetical companies that apply pressure to the FDA to get their products approved, the AMA who say what can be taught in the colleges, and their lobbiest to our government. Overseas the doctors are also taught natural medicine and coventional medicine. Long before their was the profession of doctors people used herbs and natural remedies. Why now are these illegal in the U.S.A. What needs to be done is put regulations on hospitals, doctors, and pharmaceutical companies as to what they can charge people. Ex. I had no insurance and went to my primary care doctor. He would charge me $71. When I became eligible for my SS insurance and went to see him he charged the insurance $101. and I had to pay $73. out of my pocket. It was the same visit as before, and no testing…why the higher bill? To me this is a rip-off of the system. This is what makes things cost more and bankrupt the system. But then this is only my thoughts..
HSAs were/are part of the consumer-driven health idea. Those participating in HSAs are not subsidized in any way. They have a high-deductible health care insurance, which means yearly deductibles of at least $2,400 for a family and a maximum out-of-pocket for a year of almost $12,000. (Higher deductibles equals lower premiums.)
This program is designed to put consumers more in control of their own decisions, and yes, the plan encouraged saving for your own medical expenses by allowing participants to put pre-tax dollars into an account used exclusively for medical expenses. Up until this year, you could use those dollars to buy OTC medications.
I think the program is partly designed to solve the huge problem of health care perception of value. It's a HUGE issue when people think it costs $15 to see a doctor or $25 to go to the ER.
Are these programs for everyone? Probably not. Do they work for everyone? Probably not. But why cancel a program that encourages people and families to save money for future health care expenses? Individuals and employers are the ones who have the option to sign up for or include these HSA plans, it's not like it's a government hand out or something.
Thanks Steve, Right on with everything you said. HSA's were terrific for people who understood high deductibles, which kept the premiums down. They were willing to gamble that they could pay for their medical expenses up to deductible and then when met, insurance would kick in. People who understood investments would purchase their HSA's attached to mutual funds to earn more interest. Unfortunately, lots of businesses made their own savings accounts based on the HSA's but they did not follow the specific rules of the govt. HSA's this caused confusion. But the real true HSA's were wonderful.
Logic???? Hey, we're talking politicians and bureacracy here…that word isn't in their vocabulary. I believe this program was primarily introduced to encourage younger workers to fund their own health care in the future a la IRA's and retirement. Also, to give people more power and choice – well, that's a ship that sank!!!!