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This Web site contains a compilation of more than a thousand consumer finance  columns written by Tony Novak from the 1980s through 2006, updated and reformatted for maximum usefulness today.  New material was added after 2010.

Content is the opinion of the author and does not represent the position of any other person or entity. Information is from sources believed to be reliable but cannot be guaranteed.

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RX cards with Health Savings accounts

originally posted: 11/22/2006  reposted: 2/18/2011 This post has not been recently reviewed or revised by the author and may be out of date. If in doubt, please send a new question or ask for an update.

Q: Can a prescription discount program independent from the HDHP be utilized with an HSA after 1/1/06? Are there any specific guidelines regarding the classification of maintenance drugs as “preventative care” which will allow a specific co-pay based prescription plan to be set up to address this situation? Is the language “Drugs taken by a person who has developed risk factors for a disease that has not yet manifested itself or to prevent reoccurrence of a disease” the controlling factor?

A: Yes, it makes sense to use both together. Health Savings accounts are completely independent of PPO discount cards so there is no interaction between them or restrictions on using both together. The tax treatment of all medical expenses, including prescription drugs, under a health savings account is described in IRS Publication 502. While the allowances are fairly liberal including benefits for preventative care, it makes more sense to consult the actual publication rather than to attempt to describe any logic that is used to determine tax treatment.


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