If you have a Health Savings Account or Flex Spending Account with money in it, your task today, the last day of 2010, is to go to the drug store, whip out that card, and buy as much over-the-counter medication as you think you might need in 2011. If you don't, you'll have to pay for it out of pocket starting tomorrow.
For reasons not entirely clear except to those who wrote the 2010 health care bill, as of tomorrow it will be illegal to use an HSA or FSA to buy over-the-counter drugs without a doctor's prescription.
Wait… that can't be right. The whole point of over-the-counter drugs is to let people medicate without a prescription. The government wouldn't make you go to the doctor's office and get a prescription just so you can use your tax-free medical savings account to buy aspirin. Would it?
Yes it would. Or, to reinterpret a campaign slogan: Yes, they did.
Health Savings Accounts and Flexible Spending Accounts are designed to reduce health care costs by empowering consumers. They allow users to save money tax-free and spend it on allowable medical purchases.
An FSA is designed to pay for expenses not covered by your insurance. You fill it with pre-tax contributions, then use it to pay for expenses such as dental treatment (typically not covered by regular health insurance), eyeglasses or office co-pays. Any money not spent by the end of the year is lost.
An HSA is designed to supplement your insurance. With a high-deductible health plan, HSA users can contribute pre-tax dollars to their accounts, then use the money to pay their regular medical bills, including everything from hospital visits to cold medicine.
Both accounts could be used to pay for over-the-counter medications. But not after today.
After today, if you catch a cold and have an FSA or HSA, you can use your card to pay for a visit to your doctor, but not to buy yourself some DayQuil -- unless you get a prescription for it. To avoid a doctor's visit, you will have to pay out-of-pocket for over-the-counter medications.
These new restrictions also apply to HRAs, Health Reimbursement Accounts funded by employers, and Archer Medical Savings Accounts.
The law will further restrict FSAs two years from now. Starting in 2013, FSA contributions will be capped at $2,500.
Why in the world would the government make you go to the doctor and get a prescription for an over-the-counter medication before you could buy it with a tax-free account created for the very purpose of encouraging people to save health care dollars rather than waste them on needless doctor's office visits?
Some say the change is a revenue-raiser for the government to help offset the cost of the health care law. Every dollar not put into these tax-free accounts is a dollar that gets taxed. But I think the reason was pure class warfare.
Reporting on the change, Kaiser Health News had this interesting analysis in June:
Many Democrats say HSAs are a tax shelter for healthy, affluent people who can afford to sock money away and leave it there to grow. A 2008 Government Accountability Office report found that the average household income of people with HSAs was $139,000, compared with $57,000 for all other taxpayers. Critics also say that requiring people to dig deeper into their own pockets to pay for health care encourages them to cut back on care they need."
The Democrats snuck this provision into the health care bill (and they did sneak it in; after the bill was passed, the New York Times called the provision a "surprise" for consumers) in part to stick it to "the rich." It was a leveling maneuver: remove a perk enjoyed by more affluent Americans to even the score between them and everyone else.
The other motive was control. People who control their own health care spending make different decisions than those for whom cost is less of a factor because more costs are paid by insurers. That helps lower health care costs. But Democrats don't trust people to make their own decisions, which is what these accounts enable people to do. So they cut a major perk from the accounts to encourage people to visit the doctor for routine medical decisions they had been making themselves.
In short, because Democrats envy the affluent and don't trust Americans to take care of themselves, starting tomorrow you can't use your HSA or FSA to buy aspirin or cold medicine, unless you waste time and money going to the doctor for permission first. So stock up today and hope the new Congress can get this ridiculous restriction repealed before your medications expire. See you at the pharmacy.