The Affordable Care Act, enacted in March, established a new uniform standard that, effective Jan. 1, 2011, applies to FSAs and health reimbursement arrangements (HRAs). Under the new standard, the cost of an over-the-counter medicine or drug cannot be reimbursed from the account unless a prescription is obtained.The previous advantage was that health products were paid with pre-tax dollars. Thus, ObamaCare increased taxes on non-prescription items by about 20%. But wait, there's more!
This guideline also taxes doctors. From now on, doctors will be asked to provide prescriptions for over-the-counter medicine. So an (economically flawed and anti-liberty by the way) effort to control health-care costs now increases either taxes or the mindless duties of doctors.
Who benefits? Let's follow the money to find out:
- Federal Revenue increases.
- Subsidizes doctors writing "over-the-counter" prescriptions. But why would a sane person pay for a doctor's office visit just to save 20% on otc products? "Doc, write me a prescription for aspirin... and band-aids."
- HSA accounts now draw down more slowly, so the HSA custodians have the benefit of a larger "float" balance. Given that HSA custodians are typically large banks, this could be a carefully planned but hidden back-room deal for the banks.
ObamaCare distorts the market. Get ready for unintended consequences.
