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    Friday, March 26, 2010

    What's in the Bill? Taxes go up on Over the counter meds

    Obama promises that the more we learn about the bill, the more we will like it.
    One of the things in the bill is the end of being able to pay for many over the counter (OTC) medicines using pre-tax dollars via a Health Savings Account (HSA) or Flex Spendign Account (FSA).
    This amounts to a tax increase equivalent to your state and federal income tax brackets, so, anywhere from 10% to 40% (or more) for some people.
    While I actually just learned about this in 2010 (unfortunately, or I would have added more money to my FSA over the last few years), it is too bad for those who need a lot of meds that were formerly prescription only (allergy meds and many others have gone OTC over the last few years).
    This is a fine example of the kinds of behavior we don't want to encourage in "bending the cost curve" as we chase tax dollars.  For some people, faced with a large tax increase on an OTC med, they will choose instead to get a prescription for a likely more expensive drug, but one that gets some insurance coverage and that they can use their HSA/FSA to pay out of.  That doesn't bend the health care cost curve, but it brings some cash to the government.
    As we learn more great stuff about this bill, I'll share.

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