The counter culture

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If you’ve used funds from your health savings account (HSA) to buy over-the-counter (OTC) drugs, such as aspirin for a headache, be aware that if you do that in 2011, you’ll pay a penalty. This change is a side effect of the Affordable Care Act. Further, the penalty for such nonqualified distribution increases to 20 percent from 10 percent this year. (HSAs allow taxpayers to cover certain medical costs tax-free.)

Kathy Pickering of The Tax Institute at H&R Block notes that you still can reap tax benefits for OTC drugs and other medical necessities if you get a prescription from your doctor, but there has to be a reason for your long-term use, such as aspirin to prevent stroke, to avoid the penalty.