Using flexible spending accounts (FSAs), health savings accounts (HSAs) and other personal health accounts to buy over-the-counter products helps high-income taxpayers much more than it helps low-income or moderate-income taxpayers.
Paul Van de Water, a senior fellow at the Center on Budget and Policy Priorities, Washington, made that argument Wednesday at a hearing on use of health accounts to buy over-the-counter products that was organized by the House Ways and Means oversight subcommittee.
Rep. Charles Boustany Jr., R-La., the subcommittee chairman and a medical doctor, says he organized the hearing because of concerns about changes in health account deductibility rules included in the Patient Protection and Affordable Care Act of 2010 (PPACA).
In an effort to reduce the amount of tax deductions consumers can take in connection with the accounts, PPACA lets consumers deduct use of FSA, HSA and health reimbursement account (HRA) funds to buy OTC products only if health care providers have prescribed the products.
The change has had a broad effect, because about 33 million U.S. residents are in families with FSAs and about 11 million are in families with HSAs, Boustany says.
“Too often in Washington, officials make decisions about health care policy based on abstract theories and budgetary scores,” Boustany said in a statement.
The witnesses participating in the hearing have shown that limits on use of health account money to buy OTC drugs hurts consumers’ access to the products, Boustany said.