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Health Reform Shatters Obama’s Tax Pledge

Workers are beginning to be informed of major health reform-mandated changes to their health care flexible spending accounts that will make the accounts far more difficult to use and that will limit the sum of health related products that can written off from taxes.

Barack Obama
I was actually against raising middle class taxes before I was for it.

The changes will result in higher taxes paid by workers making less than a quarter million dollars a year. President Obama promised that wasn’t going to happen.

The accounts allow employers to set aside an unlimited amount of salary for employees to use to purchase health related products, like prescription and non-prescription medicines.

Under the health reform law, workers will now need a doctor’s prescription to use FSA’s to buy even mundane over the counter items such as Advil, antacid, or cold medicines. In addition, the accounts will now be limited to $2,500.

Were you aware of this?

I wasn’t.

Look at this message I just received yesterday from my health care flexible savings account provider.

Eligible Over-the-Counter Medicines and Drugs Will Require a Prescription to be Reimbursed – Effective January 1, 2011

Beginning January 1, 2011, currently eligible over-the-counter (OTC) products that are medicines or drugs (e.g., acne treatments, allergy and cold medicines, antacids, etc.) will not be eligible for reimbursement from your Health Care FSA – unless – you have a prescription for that item written by your physician. The only exception is insulin – you will not need a prescription from January 1, 2011 forward. Other currently eligible OTC items that are not medicines or drugs, such as bandages and nasal strips, will not require a prescription.

THIS IS A TAX INCREASE. Who is going to go to their doctor to get a prescription for Maalox?

Well, a small percentage will, driving up paperwork for already besieged doctors. But most of us will take the hit and no longer be able to buy over the counter medicines tax free. And if your employer offers accounts larger than $2,500 and you use them, you’re out luck. THAT’S WHAT IS CALLED A TAX INCREASE.

Now who said this:

If you make less than $250,000, less than a quarter-million dollars a year, then you will not see one dime’s worth of tax increase.

OBAMA SAID IT.

But I just got a note today saying my taxes are going up. And guess what? As my wife will tell you, I AM MAKING LESS THAN $250,000 A YEAR.

Do people making more than that bother with these accounts? My guess is if you are getting hit by this new law, you’re in the group whose taxes weren’t supposed to go up under the current regime.

Now, interestingly enough, the $2,500 limit does not take effect until 2013, which of course is after Obama’s first term ends. This is just way too cute. I want to wrap it up and give it to my niece.

Sorry, Mr. President, but even if the tax takes effect after your first term, you’ve still raised taxes.

Also, starting in 2018, FSA’s will be counted toward the determination of whether an employer’s health plan is so generous that it qualifies for an excise tax – another incentive not to offer them.

Workers do not seem to be aware of the change, and providers of the accounts aren’t quite sure what to tell them, according to Judy Dietel, chief compliance officer at WageWorks, the leading third party administrator of FSA’s.

“We’re waiting for guidance,” she says, noting that industry officials are not yet clear which type of medical professionals will be able to write prescriptions and which won’t.

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7 Responses to Health Reform Shatters Obama’s Tax Pledge

  1. I’m stunned. You have an insurer who would reimburse you for OTC drugs!!
    I’m not familiar with the insurance policy as you describe it but it’s over-the-stars-and-moon better than my Medicare (that I paid in advance for 44 years).
    Quit whining, pay for your Aleve out of pocket like the rest of us.
    Get used to it.

  2. See how clever this bloke is: “You will not see ONE DIME’S worth” of tax increases,” because you will see MILLION’S of DIME’S worth.

    • Good work – you’re parsing their phrases the way I have to do at the White House! Gotta listen real carefully over there.