Side Effects: Ball Drop Brings Bad News for Consumer-Driven Health Plan Users

Margot Crouch / December 31, 2010

This year, as the clock strikes twelve on New Year’s Eve, Americans who depend on health savings accounts (HSAs) to make medical expenditures more affordable will experience first-hand yet another adverse side effect of Obamacare.  Starting in 2011, American families will no longer be able to use HSAs to purchase over-the-counter drugs, such as cough and allergy medicines.

Americans using HSAs will not be the only ones affected.  The provisions of the new law will also change rules regarding the use of flexible spending accounts (FSAs) and health reimbursement accounts (HRAs).

One of the benefits of these savings accounts is that they allow users to put some of their earnings into a separate, tax-free account.  This money can then be used for out-of-pocket medical costs such as medical deductibles, eyeglasses, and prescriptions.  Since users can make medical purchases using pre-tax dollars, these accounts help cut out-of-pocket costs by about 20 percent, on average. (more…)