Taxing My Health

One of the benefits my employer offers is the opportunity to put pre-tax dollars from my paycheck into a so-called "Medical Flexible Savings Account." The money thus saved can then be used during the year to pay medical expenses otherwise not reimbursed by my health insurance - things like co-pays, prescriptions, various over-the-counter drugs, eyeglasses, and so on. The medical FSA is a wonderful thing, as far as it goes...but I have a few problems with the system.

One is that the money placed into the account must be completely used up within the calendar year; any balance remaining after April 15th of the following year simply disappears. Why should that be? This is money I set aside for my health and the health of my family...it's not as if I'm going to use it in slot machines or to buy aluminum siding. Why on earth should this money not remain in the account and accumulate from year to year against the possibility of a major future medical expense? After all these years, no one has ever given me a rational explanation.

Another is that the Internal Revenue Service, because it isn't getting its cut of the money saved in the FSA, places many restrictions on what can be reimbursed and what can't. As an example, I submitted a reimbursement request last week which included receipts for two prescriptions and one over-the-counter drug - and was asked to submit a signed statement certifying that they "are to treat specific medical conditions and are not to be used for any type of cosmetic purpose or to maintain general health."

The part that irks me here is "not to be used...to maintain general health." I would have thought that the IRS would have a vested interest in keeping taxpayers healthy so they can keep earning money and paying more taxes. Why are prescription drugs used "to maintain general health" not authorized to be reimbursed? I suppose I can understand the constraint on reimbursement of drugs for "cosmetic purposes" (there's only so much I can do with this face, anyhow), but why the restriction on health maintenance? I have a similar problem with the restrictions on how much can be deducted for medical expenses on an itemized tax return - if the point is to get the maximum in taxes out of each of us, wouldn't you expect the IRS to want us to be healthy so we can keep working?

As a matter of general principle, I don't have a problem with paying taxes. But I do have a problem with what I perceive as unfairness and irrationality. If you're reading this blog and are a tax attorney or an employee of the IRS, and can explain this to me in real-people language, please post a comment.

Because all this beating my head against a wall is bad for my health.

Have a good day. More thoughts tomorrow.

Bilbo