100% Tax Increase on HSA Withdrawals
$1.4 Billion Tax Increase to Fund Government Takeover
Not only does ObamaCare tax HSA withdrawals for over the counter health care items and first aid treatments, but it also hits families who use their HSAs for nonmedical early withdrawals. Beginning January 1, 2011, families with HSAs will be subject to a 20 percent penalty tax on nonmedical early withdrawals. That’s a 100 percent increase from current law!
HSAs allow people to send less money to the insurance company in exchange for an insurance policy with a higher deductible. The savings is deposited tax-free into personal and portable Health Savings Accounts. American families use their HSA to pay for routine medical care or save it for their medical care in the future.
Families can use the money in their HSAs prior to age 65 for nonmedical care such as maintaining their mortgage or a child’s college tuition. Under current law, they have to pay income taxes plus a 10 percent penalty. Beginning January 1, 2011, ObamaCare increases the tax by 100 percent. So, families who use their HSA for nonmedical reasons prior to age 65 will pay income taxes plus a 20 percent penalty.
The Joint Committee on Taxation estimates this tax will cost families an additional $1.4 billion of their money to fund ObamaCare, and this new HSA tax is larger than the tax on IRAs and 401(k)s.
An estimated 8 million Americans used HSAs in 2008.
For past ObamaCare Flatlines, go here.