Health Care tax hikes

User Forum Topic
Submitted by meadandale on March 24, 2010 - 12:07pm

http://www.kiplinger.com/businessresourc...

Brilliant. Thanks Obama/Pelosi/Reid. There's a special place in hell for all you people.

As someone who has an HSA account with a high deductible policy this really pisses me off. I pay for everything out of pocket until I hit my annual cap. That means that I pay for 100% of doctor visits, prescription drugs, etc with money that I've set aside in my HSA account.

Now, due to the deals that were obviously struck with big pharma, I can longer buy any OTC medications using my HSA funds.

Oh, and just in case you didn't get the memo, they are going to double the penalties for using your HSA funds for non-qualified expenses so they can stick it to you if you don't realize they changed the law.

Fuck it...I'm going to just cancel my health insurance and go on the public dole. I pay out the ass in taxes every year and try to practice personal responsibility. That ends now.

Submitted by LAAFTERHOURS on March 24, 2010 - 12:21pm.

This one is bullshit - A ban on using funds from flexible spending accounts, health reimbursement arrangements or health savings accounts for the cost of over-the-counter medications, starting in 2011.

Looks like I am buying up all sorts of OTC crap if I have surplus at the end of the year.

Submitted by poorgradstudent on March 24, 2010 - 12:30pm.

My girlfriend uses a HSA for her prescription medications. It doesn't look like the changes will really affect her. It was nice knowing that if there was money left over we could burn it on tums and aspirin, and I do feel the ban on OTC medications with HSA is a bad change; there are a lot of extremely helpful OTC medications out there, many of which arguably are part of "preventative medicine" and we should be encouraging people to use. Still, HSAs were never really intended as a way for people to dodge paying taxes with common household expenditures.

I'm not a huge fan of mandatory health insurance. I personally think we should have paid for these important reforms the way we pay for wars: income taxes. Health spending benefits the overall population more than bombs and guns do, and health issues kill way more Americans each year than terrorists could ever hope to.

I also think the excise tax on high cost health plans will lead directly to the thresholds being the exact amount of coverage employers provide. As a revenue stream it will be useless. As a cost-control method, it might be effective in creating a more level playing field. Or, it could hit the consumer with more out of pocket costs.

Submitted by SK in CV on March 24, 2010 - 12:41pm.

Waaaaaaaaaaaaaaaaaaaaa.

Submitted by briansd1 on March 24, 2010 - 12:43pm.

poorgradstudent wrote:
HSAs were never really intended as a way for people to dodge paying taxes with common household expenditures.

Exactly. It closes a loophole. It's not a new tax.

poorgradstudent wrote:

I personally think we should have paid for these important reforms the way we pay for wars: income taxes. Health spending benefits the overall population more than bombs and guns do, and health issues kill way more Americans each year than terrorists could ever hope to.

I agree.

But better to have health insurance than none.

poorgradstudent wrote:

I also think the excise tax on high cost health plans will lead directly to the thresholds being the exact amount of coverage employers provide.

Yes, and what was paid in health insurance benefits will be paid in salary. I see nothing wrong with that.

Submitted by blahblahblah on March 24, 2010 - 12:48pm.

It is a drag to be sure. Actually canceling health insurance might not be a bad deal, even with the 2% penalty. Let's say you make $100k a year, you pay the $2K penalty and then just go to TJ for all of your healthcare needs and prescriptions. You would still probably come out ahead of paying HI premiums and copays here.

The one that really confuses me is this one:

A new 40% excise tax, beginning in 2013, on high-cost health plans, defined as those providing coverage in excess of $8,500 for individuals and $23,000 for families. The House’s package of modifications includes higher threshold amounts and an initial effective date of 2018.

What does that even mean to provide coverage in excess of some amount? Does that mean you are covered for more than $8500/year? Seems pretty low to me.

Submitted by SK in CV on March 24, 2010 - 1:05pm.

Sloppy reporting

CONCHO wrote:
The one that really confuses me is this one:

A new 40% excise tax, beginning in 2013, on high-cost health plans, defined as those providing coverage in excess of $8,500 for individuals and $23,000 for families. The House’s package of modifications includes higher threshold amounts and an initial effective date of 2018.

What does that even mean to provide coverage in excess of some amount? Does that mean you are covered for more than $8500/year? Seems pretty low to me.

Besides the reporting using only the original Senate bill, and not the reconciliation bill, which will be passed and signed into law later this week, it changes a few words which also changes the entire thrust of the law.

The reconciliation bill changes the amounts to $10,200 and $27,500. The tax has nothing to do with benefits, only premiums. Insurance companies will pay a 40% excise tax on the amount of premiums that exceed those amounts. For an individual, a policy that costs $11,200 a year would be subject to a $400 excise tax, to be paid by the insurance company. Those taxes will be built into the premium cost, so for every premium dollar over the limit, the insurance company will actually raise their rates by roughly 67% to cover the tax. (A policy with annual premiums of $11,200 would be priced at $11,867. 40% excise tax on the amount over $10,200, or $1,667 would be $667. Insurance company ends up with $1,000 more in net premiums.)

Submitted by blahblahblah on March 24, 2010 - 1:14pm.

Thanks for the explanation SK. So this means that if you're currently paying $11200/year you will pay $11867/year under this new system? Many people with any sort of serious pre-existing condition will get hit by this, $1000/mo premiums are not uncommon at all.

I think we will see a lot more people from border areas heading to Mexico for treatment and abandoning US health insurance altogether. Of course if that happens they'll make doing so illegal I'm sure.

Submitted by dbapig on March 24, 2010 - 1:20pm.

CONCHO wrote:

I think we will see a lot more people from border areas heading to Mexico for treatment and abandoning US health insurance altogether. Of course if that happens they'll make doing so illegal I'm sure.

I really doubt enough will really go across the border and abandon US health insurance. Many may, but will enough? Doubt it.

Submitted by Coronita on March 24, 2010 - 1:29pm.

Sorry to hear that. I think for some, all this means is re-aligning budgets. Since the government is doing a fine job taking care of the needy, I suppose one doesn't need to give as much in charitable contributions moving forward now. The other thing is...Start selling assets and taking your gains while the tax rates are low.

Submitted by all on March 24, 2010 - 1:22pm.

Are the limits auto-adjusted for inflation every year?

Submitted by danielwis on March 24, 2010 - 1:35pm.

I agree.

I think you should cancel your insurance. In fact I think you should ask your company to eliminate your job. Maybe they could send it over seas. Maybe then you'd have some empathy for people with real problems. You know, problems slightly greater than not being able to use your HSA to buy aspirin.

Submitted by SK in CV on March 24, 2010 - 1:40pm.

CONCHO wrote:
Thanks for the explanation SK. So this means that if you're currently paying $11200/year you will pay $11867/year under this new system? Many people with any sort of serious pre-existing condition will get hit by this, $1000/mo premiums are not uncommon at all.

I suspect the number of people hit by the excise tax will be quite small. I don't know very much about insurance premiums in other states, but in California, a $1,000 a month policy for a single person is pretty damn expensive. I have a bill here in front of me for a 64 year old man (he turns 65 next month), and the premium, including his 21 year old son is $942 a month. It's an individual policy, with the largest preferred provider network in the state, a $500 annual deductible and $10 copays for dr. visits. It's damn good coverage, close to the most expensive that Anthem Blue Cross offers for a PPO.

Aetna's most expensive small group HMO (with a $10 copay) for 60-64 year olds has annual premiums of $10,872. The $15 copay (which I pay for my staff) is $10,212 for that same age group. The annual premiums would go up by about $8 a year. Only for the oldest age bracket.

Submitted by SK in CV on March 24, 2010 - 1:43pm.

captcha wrote:
Are the limits auto-adjusted for inflation every year?

Yes, they are. And if the CBO's inflation estimate is below actual, the initial rates will also be adjusted. The excise tax doesn't kick in until 2018.

Submitted by ucodegen on March 24, 2010 - 2:03pm.

Exactly. It closes a loophole. It's not a new tax.

Really? Can you name an over-the-counter equivalent to a prescribed drug used to prevent blood clots. The over-the-counter drug is both safer and keeps the clotting factor of the blood more stable.

The prescribed drug is Coumadin or Warfarin... what is the OTC equiv? NOTE: Nursing homes prefer to use the OTC drug because it is more stable and has fewer side effects. Coumadin/Warfarin has an efficacy of about 3 days, the OTC drug has an efficacy of 11 days.

Here is info on Coumadin/Warfarin.. take a look at all the warnings/side effects. The OTC drug has far fewer side effects/warnings.
http://www.drugs.com/coumadin.html

Submitted by meadandale on March 24, 2010 - 2:18pm.

danielwis wrote:
I agree.

I think you should cancel your insurance. In fact I think you should ask your company to eliminate your job.

I work for myself moron. But nice try.

And, frankly, considering how high the costs of some over the counter drugs I take are (prilosec and mucinex come to mind) I don't think that it is at all unreasonable for me to be able to use money I've set aside specifically for health expenses to pay for them.

Aren't all you lefties for preventative health care? I suppose it's fine when I get to pay for YOUR preventative health care but not when I'm paying for it myself?

Submitted by meadandale on March 24, 2010 - 2:37pm.

Another take on the "Medicine Cabinet Tax":

http://www.openmarket.org/2010/03/23/hea...

And this tax change will almost certainly cost the health care system billions more dollars in unnecessary spending both to the government and private insurance plans. The Joint Committee on Taxation estimates that the tax hike will bring in $5 billion in revenues over ten years - itself a drop in the bucket when compared to the bill’s new trillion-dollar entitlement - but that estimate doesn’t take into account behavioral changes as a direct result of this provision.

OTC drugs are much cheaper those available for prescription, but they could now be more expensive to individual consumers given that prescription drugs would still be eligible for favored treatment in the tax plans, and that insurance companies would be mandated to cover many of them. Consequently, any time a consumer has the slightest headache, the financial incentive would often be to see a doctor and get a prescription rather than go to the store and get medicine off the shelf.

This could mean that billions will be wasted on the additional costs for prescription drugs in instances when OTC medicines could be just as safe and effective at treating the illness. A 2005 study in the American Journal of Managed Care found that the Food and Drug Administration’s clearing of antihistamines such as loratadine (Claritin) for over-the-counter sale saves about $4 billion a year in health care costs. Ironically, the liberals and Democrats who normally rail against big pharmaceutical companies are now creating a huge windfall the firms that make expensive prescription drugs by penalizing users of OTC medicines.

Submitted by Coronita on March 24, 2010 - 2:58pm.

Actually, for those of those concerned about not being able to get a FSA/HSA re-imbursement for OTC drugs..It's simple (though not the most cost-effective for the system).....Just go see your doctor, and ask for a prescription form of the OTC drug...

For example,
*Instead of getting Claritin OTC ask your doctor to prescribe Clarinex.
*Instead of paying out of pocket for things like Aspirin/pain relieve, get your doctor to prescribe you the prescription form.
*Need a fiber laxative. Get your doctor to prescribe one too.
*Need vitamins, get your doctor to prescribe your those too (for women, get the prenatal prescription ones)...

Ironically, all this does is drive up cost in the system...Hope it was worth it.

Whoops. Meadandale, you beat me to it...
You know, folks that's been around medicine coverage already know this...Out of pocket expenses have always been cheaper getting prescription form in large quantity versus OTC. Even more so when/if those FSA/HSA kick in.

I guess the bigger issue is technical folks who wear contacts will need to get a prescription form of that too...Because all those cleaning solutions are OTC and won't be eligible too...Lol....

Submitted by briansd1 on March 24, 2010 - 2:53pm.

ucodegen wrote:
The over-the-counter drug is both safer and keeps the clotting factor of the blood more stable.

I don't see the problem with people buying aspirin and OTC medication using after tax dollars, just like they pay for other everyday household expenditures.

Aspirin can be purchased for $2 at walmart. That's lower than the copay on prescription medication so the patient will save money when choosing OTC vs. prescription.

Submitted by Coronita on March 24, 2010 - 2:59pm.

briansd1 wrote:
ucodegen wrote:
The over-the-counter drug is both safer and keeps the clotting factor of the blood more stable.

I don't see the problem with people buying aspirin and OTC medication using after tax dollars, just like they pay for other everyday household expenditures.

Aspirin can be purchased for $2 at walmart. That's lower than the copay on prescription medication so the patient will save money when choosing OTC vs. prescription.

You obviously never purchased something like Claritin otc or have practical experience dealing with medication on a regular basis. Fortunately for you, you're probably pretty young where you think nothing will never happen to you.

BTW: got contact lenses? Those are OTC cleaners you know.

Submitted by briansd1 on March 24, 2010 - 2:58pm.

flu wrote:
Just go see your doctor, and ask for a prescription form of the OTC drug...

For example,
*Instead of getting Claritin OTC ask your doctor to prescribe Clarinex.

That would be stupid because you'd have to make an appointment with the doctor, wait to go there, waste your time, AND pay the copay for the doctor visit AND pay the copay for the medication.

Submitted by Coronita on March 24, 2010 - 3:06pm.

briansd1 wrote:
flu wrote:
Just go see your doctor, and ask for a prescription form of the OTC drug...

For example,
*Instead of getting Claritin OTC ask your doctor to prescribe Clarinex.

That would be stupid because you'd have to make an appointment with the doctor, wait to go there, waste your time, AND pay the copay for the doctor visit AND pay the copay for the medication.

Um, no. Because for most of these things, they are reoccuring unlike say antibiotics. Someone who has chronic migranes for instance would just give one doc/nurse practiioner a visit and get a few months of supply. And you wouldn't see a doctor for this, nurse practioners would write the prescription too I believe.
When I use to be on alergy medication, it was far cheaper out of pocket to get 6 months refillable supply of Clarinex versus a OTC Claritin (because for awhile a Claritin pill was $3/pop out of pocket). My copay on a 6 months supply was $10 (when I had what was considered a Caddillac health plan)...I believe the cost was close to $1000 for the insurance.. The company paid for the premiums and it was an executive plan. I just wonder now with these revised health plans, who's on the hook for this....Interesting times indeed.

Doesn't it at all bother you that the drug companies aren't exactly complaining about this bill? Have you not noticed how the companies are reacting to this news...Do you think drug companies make more off of prescriptions or OTC? Have you not noticed on how the equities markets are reacting wrto these drug companies.

Submitted by an on March 24, 2010 - 3:09pm.

flu wrote:
briansd1 wrote:
ucodegen wrote:
The over-the-counter drug is both safer and keeps the clotting factor of the blood more stable.

I don't see the problem with people buying aspirin and OTC medication using after tax dollars, just like they pay for other everyday household expenditures.

Aspirin can be purchased for $2 at walmart. That's lower than the copay on prescription medication so the patient will save money when choosing OTC vs. prescription.

You obviously never purchased something like Claritin otc or have practical experience dealing with medication on a regular basis. Fortunately for you, you're probably pretty young where you think nothing will never happen to you.

BTW: got contact lenses? Those are OTC cleaners you know.


Or Abreva, or natural tears eye drops.

Submitted by briansd1 on March 24, 2010 - 3:12pm.

flu, you're already doing that so the new system will not affect you. It's cheaper for you to get the prescriptions.

For those who need OTC infrequently, it's still cheaper for them to buy OTC.

Submitted by Coronita on March 24, 2010 - 3:16pm.

briansd1 wrote:
flu, you're already doing that so the new system will not affect you. It's cheaper for you to get the prescriptions.

For those who need OTC infrequently, it's still cheaper for them to buy OTC.

Um, actually the new system will affect me, because currently I pay nothing for health care with my pre-existing condition. Like I said, I am on a medical plan for which I pay nothing in deductibles, no payroll deduction, and the only thing I pay are drug copays of $5/$15. Of course, most likely these things are going away, because they are considered an "Caddy plan".

Submitted by briansd1 on March 24, 2010 - 3:17pm.

flu wrote:

BTW: got contact lenses? Those are OTC cleaners you know.

I got lasik. But before that I got daily disposables at Costco. The daily disposables are much cheaper (per unit) than the reusable ones and you don't need to bother with cleaning.

Actually the daily disposables are the same as the reusable ones so you can clean them if you wish to save money.

Submitted by meadandale on March 24, 2010 - 3:18pm.

briansd1 wrote:

For those who need OTC infrequently, it's still cheaper for them to buy OTC.

Ah, but I have chronic GERD. I have to take it daily. Prilosec OTC costs me upwards of $1/pill. Since I have an HSA plan, I'm out of pocket for everything. If I got a prescription, instead of paying $1/pill (pretax) I'd be paying 2-3x that for the prescription version..plus the cost of seeing the doctor. Oh, but the money I spent on the doctor and the drugs would qualify for HSA money. Goody.

Yeah, that's real cost effective for me...and our health care system in general.

I agree with flu: brian is obviously young...and naive.

Submitted by briansd1 on March 24, 2010 - 3:21pm.

flu wrote:
briansd1 wrote:
flu, you're already doing that so the new system will not affect you. It's cheaper for you to get the prescriptions.

For those who need OTC infrequently, it's still cheaper for them to buy OTC.

Um, actually the new system will affect me, because currently I pay nothing for health care with my pre-existing condition. Like I said, I am on a medical plan for which I pay nothing in deductibles, no payroll deduction, and the only thing I pay are drug copays of $5/$15. Of course, most likely these things are going away, because they are considered an "Caddy plan".

Not being to buy OTC medication on your flexible spending plan does not affect you. You already choose the prescriptions over the OTC meds.

You may need to pay income tax on the caddy plan, as you should, in my opinion. It's part of your compensation so why should it be untaxed?

That would encourage employers to pay higher salaries to employees who don't need caddy plans like you do.

Submitted by air_ogi on March 24, 2010 - 3:21pm.

We should have a system where everyone can pay with pre-tax money for OTC medication or no one can.

Prilosec is $17 for 42 days on Amazon. Unless you are in 95% income tax bracket, there is no way that it would be cheaper buying the prescription version.

Submitted by Coronita on March 24, 2010 - 3:23pm.

air_ogi wrote:
We should have a system where everyone can pay with pre-tax money for OTC medication or no one can.

Prilosec is $17 for 42 days on Amazon. Unless you are in 95% income tax bracket, there is no way that it would be cheaper buying the prescription version.

I supported a lifetime/transferable health savings account with no strings attached. But like I said, it doesn't fly because a majority of Americans have no concept of "saving"...

Submitted by briansd1 on March 24, 2010 - 3:24pm.

air_ogi wrote:
We should have a system where everyone can pay with pre-tax money for OTC medication or no one can.

I absolutely agree.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.