The medicine cabinet tax, a $5.3 billion tax on middle-class families and seniors, is one of Obamacare’s many taxes. Rep. Lynn Jenkins (R-KS) has introduced commonsense, bipartisan legislation that mitigates the impact of this tax.
H.R. 4618 pauses the medicine cabinet tax for 2018 and 2019. The tax prohibits Americans from buying over-the-counter prescriptions with funds from health savings accounts (HSAs) or flexible spending accounts (FSAs). The tax affects the 20 million Americans with an HSA, and 35 million Americans with a FSA.
HSAs and FSAs allow individuals to set aside pre-tax dollars that they can later spend on their own healthcare expenses. These accounts encourage a consumer driven healthcare model that empowers American families and small businesses to make their own healthcare decisions, without government interference.
However under Obamacare, individuals are not able to use the tax benefits associated with HSAs or FSAs to purchase over-the-counter medications unless they have a prescription for this medication from a doctor. This regulation needlessly complicates the decision-making of millions of HSA and FSA users, creates an unnecessary bureaucratic burden for doctors, and restricts access to commonly used medication.
Rep. Jenkins’ bill gives HSA and FSA holders the freedom to use pre-tax dollars to purchase over the counter medicines for their household. It makes no sense to restrict the ability of millions of American families to use their hard-earned income to purchase commonly used medication.
Congress should pass H.R. 4618 as a standalone bill or as part of a comprehensive package. ATR supports H.R. 4618, and urges all members of Congress to do the same.