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H.R. 1270 – Restoring Access to Medication and Improving Health Savings Act of 2016

H.R. 1270 – Restoring Access to Medication and Improving Health Savings Act of 2016

This law is a new one working through Congress, and a lot of people haven’t heard about it yet. I want to bring it to your attention because it could save our family – and possibly yours too – a lot of money. The law proposes to modify the existing healthcare law, the Affordable Care Act, to allow the use of Health Savings Account (HSA) and Flexible Spending Account (FSA) funds for over the counter medications without a prescription.

How the Process Works Now

You can pay for over the counter medications with HSA and FSA funds now – but only if you have your doctor write you a prescription. To pay for your allergy medicine or headache medicine you need to go to the doctor every time you need more and have them write down on a prescription pad the medication is necessary. Then, you go to the pharmacy and have them “fill” the over the counter medication just like they would fill prescription medications.

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Advantages of using an HSA or FSA

Advantages of using an HSA or FSA

In order to deduct medical expenses off of your taxes, they need to reach 10% of your adjusted gross income per the IRS rules. Did you know there’s a way to reduce your tax burden on medical expenses even if you’re under that 10% threshold? You can do it by using an HSA, FSA, or other tax-favored plans. There’s a lot of legal jargon in the references. The main gist is if your employer offers one of these options it would be a good idea to take advantage. Just make sure to read and understand whatever paperwork they give you to describe the plan and its features.

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Medical Expenses and Taxes

First and foremost, the rules change every year. I’m not a tax expert. My information comes from the IRS website. It’s important to consult a tax professional if you need help with your taxes. Now that the legal stuff is out of the way…

If you have a ton of medical expenses every year you have three main options as far as taxes are concerned.

  1. Health Savings Account – Pre-tax money for use on medical expenses
  2. Flexible Spending Account – Also pre-tax money for use on medical expenses, but with different rules.
  3. Itemize your taxes and reduce your tax burden by claiming medical expenses as a deduction.

Doing one or two does not prevent you from doing number three, but you can’t use the tax-free money and then claim those medical expenses as a deduction on your taxes.

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