What Gives? Prescription Drug Coupons Can Bite Consumers? Really?
Today’s video features an extreme example of the government’s paradoxical position in allowing practices or products that benefit consumers while simultaneously implementing punitive measures to discourage use of those practices or products.
What follows is actual copy forwarded to interested parties from a state Insurance Department.
- Subject: Bulletin 2022-01 – Potential Unintended Tax Consequences for Individuals with Health Savings Accounts When Using Pharmacy Discount Cards Bulletin 2022-01 has been issued to inform consumers, employers, insurers, and other stakeholders of potential negative tax consequences resulting from the use of prescription drug discount coupons by individuals with health savings accounts. Louisiana law requires insurers to apply the value of third-party payments, such as discounts and vouchers, toward satisfaction of the insured’s annual deductible. For individuals with a health savings account, IRS rules restrict the use of medical discount cards until the individual has satisfied a minimum annual deductible. The interaction of these two requirements may materially alter the tax status of contributions to the individual’s health savings account for any tax year in which the individual redeems a prescription drug discount coupon.
Drug discount coupons, while at times controversial, are allowed to exist. Health savings accounts are not controversial. They allow those who have these accounts to pay out-of-pocket medical expenses from them with pre-tax dollars.
Even if there is a rationale for the IRS position discouraging the use of drug discount coupons, how could a consumer know this? Is it remotely enforceable? Aren’t there bigger problems to fix or sources of revenue to go after? And what about Flexible Spending Accounts? Those accounts also provide a source of payment for out-of-pocket medical expenses with pretax dollars.
We have no call to action here. This is merely an example of how removed bureaucrats can be in an era where there is so much to fix and affordability remains elusive.