If you use a medical flex-spending account or health savings account to buy your over-the-counter products, be prepared for changes next year. Instead of using your flex spending account debit card to pay for these products outright, you will now need a doctor’s prescription to buy them.

According to Dr. Douglas Henley of the American Academy of Physicians, “It’s going to create a lot of new obstacles for patients and their doctors.”

For the person who uses his/her flex-spending account to buy those medications, it’s now going to cost more.  Starting next year, patients will have an increased cost of going to the doctor to write the prescription and then subsequently going to the pharmacy to have it filled…all adding to the the overall cost of the medications.

This just seems to be an unnecessary hassle and burden,” Henley said.

Another change that baffles the medical community is starting January 1, flex spending accounts will no longer recognize breast feeding as a form of medical care. For many years now, breast-feeding mothers received a tax break when purchasing supplies through their health flex spending account.

According to the new IRS tax code, breast pumps and accessories are no longer qualified expenses for employer flex spending accounts.

For many medical experts, breast-feeding is more than just a method for feeding children and breast milk is more than just food.  It is a key element to strengthening a child’s immunity system.

These changes as well as other changes that take effect in 2013 are expected to decrease costs, saving the federal government money. The savings would be used to help insure the uninsured,  a key goal of health reform. Not affected in this change are durable medical supplies, such as crutches, bandages or braces.  The changes  are slated for the start of the new year and will only affect people with flex spending (FSA) or health savings accounts (HSA), which use tax deferred money for qualified medical expenses. For those who don’t have one FSAs or HSAs, or pay out of pocket, nothing changes.

There may be additional changes for reimbursement through flexible spending, depending on the insurance provider.

Additional information:
Check on flex spending account changes through the FSAFeds.com website.

Flexible Spending Account Rules Change for 2011 Affecting Over-the-Counter Medications

Too soon to start thinking about how to deal with your flexible spending accounts (FSAs) in 2011?  Not exactly. How you use funds that you set aside in these special health savings accounts will be changing in several key ways.

Under the new healthcare reform law, people whose employers offer these medical reimbursement plans will be required to get a doctor’s prescription for non- prescription drugs if they plan to use their FSA funds.

The new health savings account rules will not be effective until Jan. 1, but if you put money into an FSA account, it’s worth planning now.  Since some doctors may require an office visit to get the qualifying prescription, you should consider asking for the prescription during a planned visit, says Helen Darling, president of the National Business Group on Health, which advises large firms on handling employee health expenses.

But what should you do if you have no plans to see the doctor soon? Darling suggests asking the doctor to write a prescription based on your most recent visit. Understand, though, there may be a fee for completing the paperwork but it will probably be much smaller than the cost of an office visit.

Before you ask for the prescription, make sure you check with the person who handles FSAs at your workplace to find exactly what these new medical savings account rules mean and what your employer needs, suggests Mark Berggren, an attorney at a benefits consulting firm Hewitt Associates. It’s likely that many employers will probably accept a prescription, good for a year, for a qualifying drug and attach to your file.

Special Note: If you use a debit card to access your FSA funds for medical expenses, it’s possible that you may not be able to use the card for non-prescription drugs, even with a doctor’s prescription on file. Instead, you may have to pay out of pocket and then submit a claim form to get your reimbursement.

If you’re not sure about the new flex spending account rules and their changes, ask your employer to spell them out, specifically how they will effect your plan.

Another big change on tap for 2013 is a cap on your annual FSA allocations. Currently, there is no cap, though many firms do limit allocations to $5,000. If you typically allocate more to an FSA than $2,500 it’s probably best  to anticipate the medical expenses and use your FSA account to pay for some of those expenses in 2011 or 2012. For instance, if you suspect braces in your son or daughter’s future, you may want to visit the orthodontist sooner than later and take care of those braces before the cap is effective in the new flex spending account rules.

With these flexible spending account rules changes just around the corner, it may be smart to stock up on some of the over-the-counter medications that your family uses with your current flexible savings account funds…while you still can.

A recent proposal from the Senate Committee on Finance recommends eliminating flexible spending accounts (FSAs) as a way to help fund costs for health care reform efforts.  If enacted, this proposal would negatively affect many Americans who rely on FSAs to manage and pay for their health care costs not covered by insurance…in essence an increase in taxes at a time when many can least afford it.

According to the Daily Kos, “The Joint Committee on Taxation told Senate leaders recently they could collect $68.6 billion over 10 years by abolishing the accounts, along with separate ones in which employers contribute money for workers to use for health care expenses. Eliminating both types of accounts would pay for four percent or more of the estimated $1 trillion to $1.5 trillion cost of expanding coverage to the 46 million uninsured.”

The search for revenue is revisiting the debate over FSAs, HSAs and other medical savings accounts. Sparking controversy from some healthcare critics, they say these accounts are actually tax shelters for the rich and encourages spending on unnecessary or otherwise frivolous expenses. On the other hand, proponents of these plans say that flexible spending account programs help people pay for high medical expenses that aren’t covered by insurance.

The Daily Koz reports the debate is further complicated by the fact that “the government doesn’t track even basic details on how the accounts are used, how much money is involved and what happens to the unspent funds. The only data available come from the industry-the companies that administer the programs for employers. Even that information is incomplete.”

According to a July 16,2009, Bloomberg news report “The House Ways and Means Committee is proposing to prohibit reimbursements for over-the-counter drug purchases using pretax health-spending plans.

The proposed limits, affecting employer-sponsored flexible spending accounts and privately owned health savings accounts, were added to a 1,018-page bill aimed at overhauling the health- care system. ”

The proposed limit would raise $8.2 billion over a decade, according to official estimates. It would supplement a proposal to increase taxes on the highest-earning Americans, including a 5.4 percent surtax on couples who earn more than $1 million.”

Stay tuned…