Flexible Health Care Accounts Are Changing; What You Need to Know
It’s enrollment time again for benefits such as health insurance and the 2011 Flexible Spending Account (FSA). The rules on reimbursement from these accounts are changing due to the health care reform law, so keep these rules in mind when signing up.
Biggest Change to FSA Plans are Over the Counter Medications
First, if you are not already aware of the benefits of a Flexible Spending Account, an FSA fund is money that is put aside out of each paycheck, using pre-tax dollars, as a type of “savings” account for certain medical expenses not reimbursed by health insurance coverage.
Some over-the-counter products will continue to be eligible, such as acne creams (Clearasil, OXY), wound cleansers (Betadine), contraceptives and family planning products (condoms, pregnancy tests), denture adhesives (PoliGrip), diabetes testing materials (strips, glucose products), diagnostic products such as thermometers or blood pressure monitors, eye care including reading glasses, and smoking deterrants (Nicoderm, Nicorette).
However some over the counter medications previously eligible for reimbursement will no longer be considered qualified as of January 1, 2011 unless a doctor writes a note stating that the product is medically necessary. These include acid controllers (Pepcid), pain relievers (Advil, Tylenol), sleep aids (Unisom), stomach remedies (Mylanta, Tums), and allergy medications (Benadryl).
A complete list of over-the-counter medications and their eligibility status can be found at www.connectyourcare.com.
Flexible Spending Accounts are also popular for people who plan to have an elective procedure such as Lasik eye surgery or parents of children who need braces, as these large-dollar expenses are typically not 100% covered under health care plans. Beginning in 2013, FSA contributions will be more limited to $2500, so if you have been thinking about one of these types of procedures, 2011 or 2012 may be the time to plan for it.
Unfortunately, however, although the health care reform act is focused on prevention of disease, expenses for nursing mothers are not considered eligible. These include breast pumps, bottles, and nursing pads. Despite evidence that breastfeeding can reduce disease among infants and may benefit the health of both women and children, the IRS considers breastfeeding as “food” and not a medical care product.
Baby electrolyte products that treat dehydration such as Pedialyte and prenatal vitamins continue to be eligible for reimbursement under FSA plans as do homeopathic remedies.