SharesSenator Marco Rubio (Republican from Florida) introduced S. 380, which provides a tax-sheltered way to pay for Quackery. This bill allows taxpayers the ability to include homeopathic remedies in their medical care when itemizing federal tax deductions. Homeopathic remedies can also be allowed as a medical expense in Health Savings Accounts (HSAs). These accounts follow the same rules as itemized deductions for medical expenses. The bill adds vitamins, minerals, herbs, and other nutritional supplements to allow medical care for itemized deductions or HSAs.Unfortunately, you will see that itemized deductions as well as Health Savings Accounts can already be used to subsidize pseudoscience in healthcare. Sen. Rubio's bill only adds to the problem, encouraging the use ineffective and potentially harmful products with tax incentives. Another example of Legislative Alchemy is this: Instead of protecting consumers against pseudoscience, the law perversely defends pseudoscience by legalizing and promoting it.We'll briefly discuss itemized deductions, HSAs, and then look at how they are being used to pay for quackery. This topic was also covered on SBM many years ago (also here). We will then examine how S. 380 would work if it were enacted to subsidize (as Dr. Gorski so aptly calls them) the one quackery that can rule all homeopathy and supplements as well as natural remedies.First, here are some things you should keep in mind while reading this post.Homeopathic remedies are not effective and will not work. Dr. Edzard Ernst, a CAM expert, pointed out that (1) homeopathic remedies can be dangerous if they contain nothing. This is because they leave patients untreated. (2) homeopathic remedies can be dangerous if they contain anything because they could poison them. The FDA has not reviewed any homeopathic remedies currently on the U.S. marketplace. However, it announced that enforcement action will be taken against all such remedies, although the agency is still pursuing a risk-based enforcement strategy. The FTC also issued a policy statement.OTC claims for homeopathy drugs that have not been substantiated by reliable and competent scientific evidence (or all of them) might not be misleading if the label or advertisement clearly communicates that: 1) There is no scientific evidence that it works; 2) The product claims are based on homeopathic theories from the 1700s, which are not accepted by most modern medical professionals.The vast majority of dietary supplement use is not safe or effective, except for a few people with specific deficiencies.Not only are herbs not necessary, but they can also be used as dietary supplements.Quacky tax sheltersThe majority of U.S. taxpayers are familiar with itemized deductions. These allow certain expenses, such as medical and dental expenses, to be deducted from taxable earnings in specified circumstances. However, recent tax law changes have made them less useful for taxpayers.Health Savings Accounts are often paired with high-deductible insurance policies. The money is tax-free and consumers can make tax-free contributions. For calendar year 2021 the IRS limits for annual HSA contributions are $3,600 per person and $7,200 per family. Consumers are responsible for all medical costs until their HSA deductible is reached. However, some preventive services such as screenings and vaccines are exempted from this requirement. The HSA distributes funds without tax, which gives the taxpayer a triple advantage.(Yes, Canadians and Englishpeople, as well as residents of other countries that have logical healthcare systems, it is true, the U.S. is just so screwy.The last time I wrote about HSAs was when Trump attempted to fulfill his promise to repeal Obamacare and replace it on day one. There were many plans in the works, including an expansion of HSAs and high-deductible insurance policies. Obamacare is still here, having been defended by Republicans. However, there are plans to expand HSAs. This is seen as a requirement for consumers to be more involved in purchasing health care products and services. The idea is that consumers will make better choices and slow the rise in health care costs if they can save money and choose when to spend it tax-free. This assumption is supported by current research. Some evidence also suggests that HSA holders may forgo necessary medical care.I find it problematic that HSAs and itemized medical deductions avoid the evidence-based medical treatment requirements of traditional public and private insurance policies. This is partly to control costs. My view is that Medicare and other private insurance policies are too generous in covering pseudosciences like chiropractic and acupuncture. However, HSAs and itemized deductions basically abandon the requirement for evidence-based medical care.You can use HSAs to pay qualified medical expenses. These expenses are defined by the IRS according to the same rules as if the deduction were for unreimbursed expenses.These medical expenses are:The costs for diagnosis, treatment, mitigation, treatment or prevention of disease and any treatments that affect any part or function. These expenses include legal medical services provided by doctors, surgeons and dentists as well as other medical practitioners.According to the IRS doctors and dentists are not excluded. Therefore, it is clear that any medical expenses incurred by patients of chiropractors and Christian Science practitioners can be itemized deductions or paid via an HSA. Acupuncture is also allowed.Payments for legal services rendered by. . . Other medical practitioners as defined in the IRS' rules. This means that naturopaths homeopaths, TCM practitioners and acupuncturists are covered in all states where they are licensed. Unfortunately, the magic of Legislative Alchemy makes diagnosis and treatment legal in every state where they are registered or licensed.The non-profit C.H.I.L.D. The legal obligation to provide healthcare for children is Child Health Insurance Liability.The IRS stated in 2000 that it didn't matter if the service was rendered by someone with the right experience or qualifications. It doesn't matter if anyone else thinks the service is medical. (Letter from Congressman Tom Latham, Dec. 15, 2000, Rita Swan) The only true criterion is that the person who paid for the service believed it was intended to cure, prevent, relieve or diagnose disease. If the customer believed this, the service was considered medical care.(I am unable to confirm that this is the IRS' current position, but quackery, even if it has been amended, is still deductible.HSAs are offered by different companies. They offer different views on the scope of CAM that is eligible for payment through an HSA. These companies can manage your HSA money and offer a debit card, online account or on-line account to make disbursements. HSA for America, for example, offers broad coverage.Only insurance policies that permit you to open a savings account for health can provide tax deductions to offset costs not covered by traditional insurance. HSA funds can be used for Ayurvedic Medicine and Traditional Chinese Medicine (TCM) among other treatments.It is not surprising that naturopaths also have a broad view of HSA coverage. California Naturopathic Doctors AssociationYour HSA money can be used for qualified medical expenses such as medical appointments with your Naturopathic Doctor, lab tests, prescriptions, over-the counter products and any other medically required prescribed services (for example, back pain massages). . . . For reimbursement, you may request a Letter from a Naturopathic Doctor detailing your prescriptions for dietary supplements.Private health insurances, however, exclude most quackery. Aetna, for example, limits coverage for chiropractic and acupuncture. It also excludes a wide range of diagnostic and treatment methods from policy coverage because of insufficient evidence in peer-reviewed medical literature.However, taking large itemized deductions may be a red flag to the IRS. The chances of being penalized or fined for an unauthorized itemized tax deduction or payment from an HSA is very slim. In 2019, the IRS audited 0.4% of individual tax returns.This brings us to S. 380. The bill is co-sponsored by Sen. Tim Scott (R.SC), who in his press release failed to mention parts about homeopathy and dietary supplements. The industry-controlled Congressional Dietary Supplement Caucus is co-chaired by Sen. Scott. (You can view the full list here. However, it is possible that some members may have changed.S. 380 would replace the IRS's already liberal position regarding the deduction of supplements. The IRS stated in its latest publication about deductible medical expenses and therefore eligible expenses for HSA funds, thatYou cannot include in your medical expenses the cost for nutritional supplements, vitamins and herbal supplements unless they are prescribed by a doctor as treatment for a particular medical condition.This leaves plenty of room for quackery, however. In some states, chiropractors and naturopaths can legally be called physicians. One can still have cancer treated by an acupuncturist or naturopath if it is diagnosed by a doctor.S. 380 would allow an itemized deduction or use of HSA funds to pay any herbs, vitamins and minerals, meal replacements products and other dietary or nutritional supplements. This is up to a maximum of $1,000 per year. It accomplishes two important things. It will eliminate any obstacles to purchasing these products using HSA funds, or claiming a deduction for medical reasons when recommended by a chiropractor, naturopath, or acupuncturist. This is even if a particular medical condition has not been diagnosed by a doctor. It will also allow consumers to buy these products off the shelf with HSA funds or deduct their costs without any recommendation from a doctor and without having to prove medical necessity.It is interesting that, although meal replacement products are clearly defined to conform with FDA rules, no legal definition has been provided for herbs, nutritional and dietary supplements or homeopathic remedies.The bill expands medical care to include amounts (again, with a $1,000 annual limit) which is a boon to another industry.You can use the equipment in the following ways: (i) To purchase equipment to be used in a program (including self-directed programs) of exercise or physical activity; (ii), To participate in or receive instruction in a programme of nutrition, exercise, or health coaching (including self-directed programs); and (iii). For membership in a gym.These terms are not defined. Other than registered dietitians and physical therapists, personal training, nutrition counseling and coaching are not regulated. There are no evidence-based standards. Certification programs do not guarantee safety or effectiveness. How many NordicTracks or Pelotons are there gathering dust in the basement?For completeness, I would like to mention that a similar Senate bill, S. 1654 by Senator Kevin Cramer (R. ND), has been introduced. It allows amounts spent on dietary supplement tax deductible and therefore allowable HSA expense expenses. There is no annual limit, unlike Sen. Rubio's bill, and it doesn't cover homeopathic remedies, exercise equipment, coaching, or the like. This bill does not have co-sponsors.GovTrack gives each bill a 1% chance to be enacted. However, I am not sure how reliable their methodology. This is a good sign, but it doesn't make it less important to contact the Senators. The law should not be used to subside quackery but protect consumers. It is particularly shocking to see the disconnect between Senator Rubio's bill and two federal agencies that are charged with protecting consumers against ineffective and dangerous products, the FDA and FTC. These agencies acknowledge that homeopathy is pseudoscience, and they are doing something, though far too little. Sens. Scott and Rubio, on the contrary, want to encourage homeopathy use by offering a tax-sheltered way to purchase it. This is unacceptable.Shares
