Who's Got Control of Your Health Care?
October 8, 2010
Vol. 6, Issue 10
The new health care reform law makes it no longer legal to pay for your over-the-counter medication from your HSA starting on January 1, unless you obtain a prescription from your doctor. This will make your health care more expensive, and will particularly increase the tax burden on more natural treatments. But, as always, there are things you can do.
Medication without a Prescription is No Longer "Qualified"
HSA owners have always been able to pay for over-the-counter medications and preventive treatments with pre-tax dollars from their HSA. Many of our clients also use their HSA to pay for nutritional supplements, as we discussed way back in 2005, in Maximize Your HSA - Issue #4.
But after December 31, you will no longer be able to pay for these expenses from your HSA, unless you have a written prescription. This is one of the provisions of the health care bill that was signed into law by President Obama on March 23.
Under the new law, expenses incurred for medicines or drugs may be paid for through your HSA only if (1) the medicine or drug requires a prescription, (2) is available without a prescription (an over-the-counter medicine or drug) and you obtain a prescription, or (3) is insulin.
This change does not affect insulin or other health care expenses such as medical devices, eyeglasses, contact lenses, co-pays and deductibles
More Money for "Big Pharma"
There were a lot of big players sitting at the table when the health care negotiations were going on. Last month I talked about the pharmaceutical industry, and the success they had at the card table.
Most medication that does not require a prescription is really very inexpensive. And drugs that were once available only by prescription, such as Prilosec, drop in price by 80% or more once they are available over the counter.
By practically ensuring that only prescribed pharmaceutical drugs qualified for this tax break, the pharmaceutical industry scored another win for themselves. The doctors also did well with this legislation, since you've got to pay for their services in order to get the prescription.
But what's good for them, ain't necessarily what's good for you...
Managing Your Health Naturally
Many people today have grown more wary of the promises of prescription drugs (and perhaps concerned about the side-effects), and are looking for more natural ways to manage their health. So they may be consulting with a chiropractor or naturopath. They may be taking fish oil to help lower their triglycerides; they may be using the amino acid tryptophan or perhaps melatonin to help with sleep.
Previously many of our clients who had recommendations from their health care practitioner were paying for these substances from their HSA. However, the law now declares that only if there is a written or electronic order, issued by an individual who is legally authorized to issue a prescription in the state, can the HSA pay for it.
In most states, that eliminates chiropractors and naturopaths. And in all states it eliminates nutritionists, homeopaths, herbalists, and most other health care practitioners.
What Can You Do About It?
First of all, I would recommend stocking up on any over-the-counter medication you use. This could include pain medicine, cold medicines, itch cream, antacids, or whatever else you use. If your health care practitioner has recommended melatonin, saw palmetto, ginkgo biloba, arginine, or any other natural medicine, stock up now.
Most nutritional supplements will last longer if stored in the freezer. I always keep my fish oil there, as it is very fragile and easily damaged by heat and light.
Then, next time you are visiting a "real" doctor who is authorized by the state to prescribe medicine, ask them for a written prescription. Make sure you have them list everything you might need.
And, as always, take good care of yourself and stay healthy. See if you can avoid the degenerative problems that most people get, and that are to a large degree very preventable.
You Keep Control
If you do use your HSA to pay for medication that the IRS does not consider as qualified, you will have to pay taxes on that withdrawal, and an additional 20% penalty.
Our intention is to help people keep more of their money in their pockets, and out of the hands of the government, the pharmaceutical industry, and the medical industry. Unfortunately, that job is not getting any easier.
You may have to jump through some hoops to maintain control, but it is your health and your money. You should be the one in control.
P.S. - Keeping your financial affairs in order is another great way to protect your health, not to mention your wealth. On October 21 at 7:00 PM Mountain Time, you can join my friend and nationally recognized financial expert Sean Rogers for a highly informative webinar discussion on "The Five Greatest Threats to Your Retirement Plan" presented by HSA for America in conjunction with Guardian Financial. Admission will be limited, but you can sign up now at www.HSAforAmerica.com/financialplan.
P.P.S. - In case you've noticed - we're changing the format of these monthly newsletters to you in an attempt to make them easier and more fun to read. What do you think? Send your thoughts to WileyLong@HSAforAmerica.com.