Health savings accounts (HSAs) are rapidly growing and gaining popularity among American families and employers, according to recently released data from America’s Health Insurance Plans (AHIP). During the past three years, the number of people with HSAs has nearly doubled. In 2010 alone, they grew by 14 percent. Over 11 million Americans currently reap the benefits of HSAs: tax-exempt savings, tax-deferred growth, and an unmatched control over healthcare choice.
Unfortunately, Obamacare poses a direct threat to HSA access. The massive healthcare overhaul will destroy HSAs through regulation. AHIP raises several valid concerns about Obamacare’s destructive impact on the availability and coverage of an increasingly appealing healthcare option.
Restricting access to over-the-counter medication is a prime example of new taxation and regulation that is harmful to HSAs. A provision in Obamacare, known as the “medicine cabinet tax,” will deny Americans the opportunity to use HSA funds when purchasing over-the-counter drugs – unless they have a prescription. Families will be blocked from common over-the-counter medication, forced instead to choose from a lineup of higher-priced alternatives.
Another tax hike comes in the form of a non-medical early withdrawal penalty, which will double from 10 to 20 percent. This will amount to a tax increase of $1.4 billion. Obamacare also enacts a 2.3% excise tax on medical device manufacturers, which will be particularly onerous on people who use HSAs to purchase medical equipment.
Something doesn’t seem quite right about this picture. At a time in which HSAs are becoming more favored by families and small businesses, the federal government is stepping in with burdensome regulations and staggering tax increases. Despite the fact that HSAs provide Americans with the incentive and means to manage their own healthcare costs, they have regrettably become a target of Obamacare’s ire.