New Changes to Flexible Spending Account Benefit Rules

Many organizations provide Flexible Spending Accounts (FSA), Health Reimbursement Arrangements (HRA), or Medical Savings Accounts (MSA) benefits to their employees as a way to help them save more of their hard earned money, Benefits like these allow employees to designate pre-tax dollars for out-of-pocket medical expenses such as doctor visit co-pays, dental treatments, medical procedures, prescriptions, etc. However the new healthcare reform law has changed the rules regarding reimbursement for over-the-counter medicines and drugs, and more changes are on the horizon.

Beginning January 1st, 2011, over-the-counter medicines are reimbursable only when purchased with a prescription. (An exception to this is insulin purchases which do not require a prescription.) If your organization currently issues debit cards for eligible purchases, you may run into some administrative issues trying to distinguish between which purchases are acceptable and which are not. For example, some unacceptable items would now include: cold medicines and pain relievers, while others such as contact lens solution, band aids, and diagnostic devices are still eligible.

Furthermore, FSA benefit spending limits have traditionally been set by individual employers; however in 2013 the government will be putting a new cap of $2,500 on all plans going forward. This means that any employees that want to take advantage of a higher limit (should you offer one), should schedule their elective procedures or surgeries before then.