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May 20, 2008
Health Savings Accounts Attacked by Backroom Earmark
Congressman Pete Stark (D-CA) is next in line to be the Chairman of the House Ways and Means Committee. He's probably also public enemy number one to Health Savings Accounts. He has tucking an earmark into a tax bill which would cripple and undermine Health Savings Accounts.
First, some background: HSA funds can generally only be used for qualified medical expenses. Taking money out for non-medical reasons generally results in taxes owed on the withdrawal, plus a 10% penalty. Taxpayers assert that the withdrawal was for medical expenses (or not) on their tax return, under penalty of perjury.
Like any other deduction, liars and cheats are caught using the IRS's audit process as it has been done for many years.
But that's not good enough for Stark. He wants to have HSA holders get independent verification that the withdrawals were qualified. Not coincidentally, there is only one company (Evolution Benefits) that has the technology to do this, and it's the one lobbying for this provision.
This provision is a win for both Evolution Benefits (who gets to corner the market on third-party substantiation, for which they have a patent), and Pete Stark (since he knows this will scare off banks, businesses, and consumers from offering Health Savings Accounts). And since it will drive up costs on Health Savings Accounts, this is a mortal threat to taxpayers who use Health Savings Accounts.
Posted by Wiley Long at May 20, 2008 10:13 AM