A Republican told me Obama health law bans health savings accounts

[Green_Lantern]

I know they aren't banned but are people who purchase an hsa instead of insurance fined or taxed by the Affordable Care Act?

[frazzled]

1. Only disbursement rules are changed

2. How are the rules changing for distributions from health savings accounts (HSAs) and Archer Medical Savings Accounts (Archer MSAs) that are used to reimburse the cost of over-the-counter medicines and drugs?

A. In accordance with Section 9003 of the Affordable Care Act, only prescribed medicines or drugs (including over-the-counter medicines and drugs that are prescribed) and insulin (even if purchased without a prescription) will be considered qualifying medical expenses and subject to preferred tax treatment.

More at: http://www.irs.gov/newsroom/article/0,,id=227308,00.html

In other words, you can't go stock up on hair tonic and wrinkle cream at the drug store and expect to have your taxes sheltered with it.

[Kennah]

3. IIRC, you now need a prescription for OTC meds in order to get reimbursed through a HSA

[Ian David]

2. Hefty Tax Break Spared in Health Care Bill

Hefty Tax Break Spared in Health Care Bill
By RON LIEBER
Published: March 26, 2010


The health care bill that passed this week offers subsidies to people with low income so they can afford health insurance. To help pay for those subsidies, people with large incomes will have higher tax bills.

It sounds like a rout for Robin Hood, but President Obama and Congress ultimately spared one big tax break — the health savings account — that Republicans love and senior members of George W. Bush’s administration had championed. In fact, the legislation makes it likely that many more people will take advantage of the accounts by the middle of the decade, keeping even more money out of the hands of the government.

<snip>

But it comes with some big restrictions. You have to use the money for health care costs to qualify for the tax break. And you can put in only $3,050 in 2010 if you’re just covering yourself, or $6,150 if you’re also covering your family. (If you’re 55 or older, you can make an extra $1,000 contribution. Anyone of any income level can put in money, and an employer can contribute, too.)

Finally, you can’t open an account unless you have health insurance with an annual deductible of at least $1,200 this year for individual coverage and $2,400 for a family. If you get your health insurance through your employer and it doesn’t offer a plan like this, then you can’t put money in an H.S.A. (A few other restrictions apply as well, and I’ve provided links to helpful Web sites on the topic in the online version of the column.)

More:
http://www.nytimes.com/2010/03/27/your-money/health-insurance/27money.html

[Indykatie]

4. False False False False

You can't get an HSA without an insurance plan and the plan has to be one with a qualifying high deductible. The 2 come together as a package.