In light of the increasing cost of health care, the pending reduction of Medicare funding with concomitant increases in costs to retirees, and the requirement that all people buy heath insurance, the Obama administration has just announced that it will allow those over 65 or those on Medicare disability to roll over any amount from a traditional IRA or 401K plan into a new Health Savings Account IRA.
This means that rather than paying taxes on IRA or 401K withdrawals and then paying for medical expenses, the funds would escape taxation in the rollover and would not be taxed if used for legitimate medical expenses, including dental surgery.
Certain elective surgeries such as facial cosmetic surgery, unless to repair accidental damage, would not be eligible. Rep. Nancy Pelosi said, "We have to draw the lines somewhere."
This may represent a savings of 20% or more to most retirees who will be forced to use their retirement savings to pay for the increased costs of the new Affordable Health Care program.
President Obama said,
"We recognize the increasing health care burden that the new Affordable Health Care legislation will have on our senior citizens and feel a moral obligation to not penalize them twice through higher health care costs and higher taxes resulting from being forced to increase their annual "taxable incomes" through the accelerated liquidation of their savings."
Unfortunately, absolutely none of the above is factual... except for the increasing burdens on senior citizens.