Health Savings Accounts to be taxed, regulated.

by guest blogger Matt Nemeth

Look out: the government has found a new way to tax and regulate your life. That is, only if you have a Health Savings Account (HSA).

Starting next year, the IRS will require you to take a doctors note to a pharmacist if you want to buy a simple bottle of over-the-counter Tylenol using your HSA card.

If you’re not familiar with the HSA it is a type of high-deductible medical insurance program introduced to consumers in 2003. Simply put, when enrolled, you have a savings account put into your name. You and your employer can add tax-free money into the account. That money is used to pay your medical bills out-of-pocket. If your treatments exceed your deductible then the insurance portion takes over and pays the rest.

This type of insurance may cost more up front but has a great side effect: individual responsibility. When the cost of a medical bill is put in the hands of the consumer, they tend to make better decisions to save money while maintaining their health.

Another benefit to the HSA is that unused funds will remain in the account indefinitely. So, if you have spent very little money over the years and want to get Lasik surgery, simply use the funds in your HSA to cover the costs.

Of course, since the individual is holding the money, the government sees this as problematic. Under new regulations being imposed by ObamaCare roughly 15,000 over-the-counter medicines will require the note from a physician if you want to use the HSA to buy them.

Who will impose these regulations? The IRS.

If you go against the new law and use your HSA to buy the OTC drugs without a note, then be prepared to pay a 20% tax on the medicine to the Feds. There is no clarity yet if a 1099 or other tax form will need to be filed along with your receipt.

Last I checked we call this an “unintended consequence”.

What other unintended consequences will this create? Well, if you have to go to a doctor to get Tylenol then you may as well ask for its stronger and more expensive version containing Codeine. After all, since you will be paying for the visit to the doctor you may as well make it worth your time. What will that do to drive up the cost of health care?

This shouldn’t come as a shock to anyone, though. The President has seemed to have a certain personal vendetta against the concept of the HSA since he took office. Individual responsibility is a concept that liberals have never been comfortable with.

This election cycle, let’s make sure Washington understands our frustration with ObamaCare and elect people who want to put the power back in the hands of the individual.

Matt Nemeth is the host of the West Nashville Eggs and Bacon Summit. It meets every 3rd Saturday of the month at the Shoney’s on White Bridge Rd. He works as a salesman and is currently the campaign manager for Timothy Lee running for State House. He currently lives downtown with his dog, Sam.

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