According to Crain Communications’ BusinessInsurance.com article on August 24, 2011, “a grass-roots drive is under way to convince lawmakers to repeal a health care reform law provision that will cap how much employees can contribute each year to their flexible spending accounts, but even backers say the chances of a successful repeal are slim.”

Before the Patient Protection and Affordable Care Act, there was no federal limit on employees’ annual FSA contributions. Employers, though, typically limit employee contributions to $4,000 or $5,000 a year.

But starting in 2013, contributions that employees can now make to their FSAs under the PPACA will be limited to $2,500. After that, the annual limit will rise directly with increases to the Consumer Price Index.

This change was primarily revenue-driven so that lawmakers could help fund the provision for federal health insurance premium subsidies to uninsured lower-income individuals. By limiting these contributions they were able to raise roughly $13 billion in federal revenue from 2013 through 2019, according to the congressional Joint Committee on Taxation.

According to Amy Bergner, a partner with Mercer LLC, “Any attempt to repeal a provision that costs revenue is far from a slam dunk.”

Gretchen Young, Senior Vice President of Health Policy with the ERISA Industry Committee in Washington, agrees,  “In this era of fiscal restraint, a repeal of the FSA cap would clearly be an uphill battle.”

Stay tuned.

Flexible spending accounts (FSAs) have been part of many employer-sponsored health plans for the past two (2) decades, used by both large and small companies to decrease health care costs for their employees. But a major change to the federal health care law this year stopped consumers from using FSA dollars to cover over-the-counter medicine without a doctor’s prescription.

Now bills floating through Congress would lift some restrictions on flexible spending accounts and allow employees to once again set aside pre-tax earnings to pay for out-of-pocket health care expenses. Minnesota Congressman and Republican Erik Paulsen introduced a bill back in February that would allow consumers to use flex accounts for non-prescription medicines as well as remove the $2,500 contribution limit on consumers.

Although this is good news for the millions who have flexible spending accounts, don’t start celebrating yet. Before any changes can be made, according to Representative Paulsen, Congress would have to find the money somewhere else in the budget (about $18 billion), and the bills’ authors have yet to identify where that money will come from.

According to Chain Drug Review, the National Community Pharmacists Association and the Consumer Healthcare Products Association have endorsed a bipartisan bill to enable consumers to buy over-the-counter medications again via flexible spending accounts (FSAs) and health savings accounts (HSAs) without needing a prescription.

Before January, OTC medicines were eligible for reimbursement under FSAs and other tax-preferred savings accounts. But the 2010 health care reform law, the Patient Protection and Affordable Care Act, required consumers to get a prescription from their doctor for OTC drugs to be eligible for FSA reimbursement.

“I have had patients complain about not being able to utilize their accounts for these products as they have in the past,” NCPA vice president Brian Caswell, owner of Wolkar Drug in Baxter Springs, Kan., said in a statement. “I support this legislation because it will allow my patients to use their tax-preferred accounts on the products they need at our independent pharmacy — without a prescription.”

An estimated 35 million Americans rely on voluntary contributions of pretax dollars to FSAs and HSAs for their basic health care needs.

In supporting the legislation, NCPA and CHPA are part of a broad coalition including physicians, pharmacies, insurance companies and pharmacy benefit managers, among others.