Major Change to FSA/HSA Accounts Starting in 2011

[JB2K]

Was just informed by my employer that starting next year our HSA/FSA account(s) can no longer be used for over the counter meds., unless you have a prescription. This is due to the health care reform bill.

Note to self to stock up on over the counter meds by the end of year using my HSA.

Got the (bad) news last week from my wife's employer.

Since we can't get political on the DIS, I will offer this non-verbal thought:

(scowl)

 

[minnie1928]

Really? See, a 10% tax on tanning doesn't bother me.

Totally agree!

 

[PA Princess]

I am disappointed in the removal of OC meds from FSA eligibility. For the most part we use our FSA funds for co-pays, dentist, eye doctor etc, but some of these costs are really just an estimate from year to year.

With the FSA you must use all funds you place in it each year or you lose the money that remains (different from the HSA). Being able to use the FSA for OC items allowed me some control in using up any surplus at the end of a year.

 

[Anjelica]

I am disappointed in the removal of OC meds from FSA eligibility. For the most part we use our FSA funds for co-pays, dentist, eye doctor etc, but some of these costs are really just an estimate from year to year.

With the FSA you must use all funds you place in it each year or you lose the money that remains (different from the HSA). Being able to use the FSA for OC items allowed me some control in using up any surplus at the end of a year.

I totally forgot about this issue. We are conservative most of the years with how much we put back for our FSA but this year for some reason we are all VERY healthy (with the exception of a flu virus at the beginning of the year)and have had ZERO major medical costs outside of what my insurance covers. We've have to spend another 1200 before end of the year (trust me I've even asked my dentist if there was any fillings that needed to be replaced anytime soon, etc. - nada). So we have been buying some OTC meds and supplies to stock up on, etc.

Ontop of the 10% tanning tax now I am going to have to pay more taxes due to not being able to hold back as much for FSA. This is so ridiculous....

 

[Anjelica]

Something else I just read about - starting in 2013 there will now be caps on Health FSA - nice, really nice. Maybe this whole health care bill or at least the obnoxious sections can be overturned by then...

A contribution limit will apply to Health FSAs starting January 1, 2013.
Previously, there were no IRS limits placed on individuals or 125 Plans
and the Employer set the maximum election limit for their Plan. As of
1/1/2013, the maximum election limit for the Health FSA will be limited to
$2,500. The dollar amount will be indexed for inflation starting after 2013.
The Dependent Daycare maximum will remain at the current $5,000.

 

[Soben]

I didn't put in extra for OTC, but it was a good way to make sure you emptied it.

They should let you roll it over if they're not going to let you empty it.

This was a good program for letting individuals take control of their own healthcare dollars...when you're responsible for the money, you spend it very differently.

 

[lisamarch]

I'm not afraid to make my doctor give me prescriptions for claritan, cough syrup, etc. I'll try not to be political (here I go) but if the physicians' lobby gets annoyed about it, they have power to change it, I'd think.

 

[SondraC]

My sentiments exactly!! Oh, he's making change allright....

So you replied to a 5 month old thread for your very first post and it's political.

 

[descovy]

For me... with an HSA this is fine news.

The HSA is often coupled with a high-deductable insurance. The money we/employer puts in rolls over year after year. It is NOT use-it-or-lose-it like the FSA.

I'd rather pay for my OTC medications out of pocket... and keep that HSA money in my account for the BIG medical expenses.

I just had a breast u/s and it cost $300... which I paid with my HSA. Guess what? I need to go back for a follow-up (enlarged node) in 3mos. That'll be another $300. AND if my problem hasn't gone away on it's own, you KNOW I'll be out more money. Our deductable is $5000!

I think it's smarter to keep that money in the HSA for when you really need it. I'll buy my tylenol/benedryl/cold medicine on my own, thank you!

Now when we used to have the FSA I would find myself "stocking up" on otc at the end of the year. And I wasn't happy about it either. It proved that we "guessed wrong" on our annual health care expenses. If OTC is going away, all you have to do is change how much you put in your FSA account. And keep that money in your pocket for something else!

FWIW, I don't think the healthcare reform is perfect (it was compromised to death by selfish politicos) but it's better than they way we were going without ANY reform. People w/o insurance do without preventitive care. then they end up in the emergency room costing TAXPAYERS way more than an insurance premium. People get sick, and when they need health insurance the most were DROPPED because now they had a pre-existing condition. It goes on and on. Here we are in a first class country giving many of our middle income folks 3rd class medical care. SOMETHING had to be done. In fact I wish the reform could do MORE!

Stepping off soapbox now...

 

[Ava]

I'm not afraid to make my doctor give me prescriptions for claritan, cough syrup, etc. I'll try not to be political (here I go) but if the physicians' lobby gets annoyed about it, they have power to change it, I'd think.

But then you have to pay a co-pay for the visit to the doctor - or at least I would under my insurance plan. I'm sure paying my $15 co-pay any time I want to buy some cold medicine would outweigh any savings I'd see by using pre-tax $ to buy the cold meds.

I still have almost $600 in FSA to spend for this year. Unless we need some cavities filled & someone gets sick this winter, I'll end up using it up buying new glasses I don't really need & stocking up on OTC meds. Depending on what the minimum contribution to FSA is (can't remember, think it's $500) I may not sign up at all next year. I'd hate to lose $ if we all stay healthy!

 

[Anjelica]

For me... with an HSA this is fine news.

The HSA is often coupled with a high-deductable insurance. The money we/employer puts in rolls over year after year. It is NOT use-it-or-lose-it like the FSA.

I'd rather pay for my OTC medications out of pocket... and keep that HSA money in my account for the BIG medical expenses.

I just had a breast u/s and it cost $300... which I paid with my HSA. Guess what? I need to go back for a follow-up (enlarged node) in 3mos. That'll be another $300. AND if my problem hasn't gone away on it's own, you KNOW I'll be out more money. Our deductable is $5000!

I think it's smarter to keep that money in the HSA for when you really need it. I'll buy my tylenol/benedryl/cold medicine on my own, thank you!

Now when we used to have the FSA I would find myself "stocking up" on otc at the end of the year. And I wasn't happy about it either. It proved that we "guessed wrong" on our annual health care expenses. If OTC is going away, all you have to do is change how much you put in your FSA account. And keep that money in your pocket for something else!

FWIW, I don't think the healthcare reform is perfect (it was compromised to death by selfish politicos) but it's better than they way we were going without ANY reform. People w/o insurance do without preventitive care. then they end up in the emergency room costing TAXPAYERS way more than an insurance premium. People get sick, and when they need health insurance the most were DROPPED because now they had a pre-existing condition. It goes on and on. Here we are in a first class country giving many of our middle income folks 3rd class medical care. SOMETHING had to be done. In fact I wish the reform could do MORE!

Stepping off soapbox now...

I wish I could do a HSA but the type of Insurance Plan I am on does not allow me to do a HSA but ONLY a FSA. Losing the money at the end of the year because I planned what I thought was an appropriate amount is not good in my books (this is based on prior years out of pocket expenses, etc.).

I'm not going to get sucked into the whole Health Care Reform debate because it is VERY political and as we know politics is banned from DIS. But as we learn more and more about the rules and new policies that are incorporated in the health care reform bill the more I am not happy. Things that existed before (i.e. OTC medicine allowed as FSA) will no longer be allowed. How many people thought that the Health Care Reform would "take" from folks?

I have yet to see my companies open enrollment information for next year so I will have to see if I am impacted negatively or positively by any of the health care reform initiatives. While I 100% agree with dropping the pre-existing condition (but have yet to see a benefit for me in that regardings) I have had to pay the 10% tanning tax AND during the start of 2010 I will most likely lower my FSA so as to not lose the money and hence have to pay higher taxes for 2011. So far I'm in the losing category of the Health Care Reform....

 

[daleswife]

Speaking from someone who works with health insurance every day: Not much at all.

After June 1, there are certain Medigap plans that won't be offered (I think four of them) and two new ones added. No matter what, if you mother and aunt are happy with their coverage, they just need to continue to pay their premiums and will be fine... whether their particular plans is no longer being offered to new enrollees or not.

Their part D coverage will in all likelihood get better. The coverage gap (or "donut hole") will be eliminated. This is a big big deal if they are on pricey medications. What people are concerned about are those retirees who have their part D plans supplimented by a previous employer (using federal money). Those benefits are now taxed to the employer, starting in 2011. The concern is that the additional tax burden will cause companies to eliminate this benefit to future retirees.

So for you aunt and mom, pretty much business as usual!

I personally don't mind the cap on HSA accounts. $2500 should be more than enough money to be sheltered for medical expenses for most folks who have insurance.

A $2500 cap wont cover my deductible!!! That means after that initial $2500 is gone, then I have to pay the remainder of my deductible and OOP for all my prescriptions after that....And while some of our prescriptions would be covered at no cost to us, my DH has 2 prescriptions that are not available in generic and we would have to pay OOP for them.....

 

[herdtoDisney]

I have good health insurance-through Federal Employee Benefits-and the $2500 can get easily blown away by ONE hearing aid (I have moderate hearing loss) and they are not covered by my good insurance, at all.

 

[riley2008]

A $2500 cap wont cover my deductible!!! That means after that initial $2500 is gone, then I have to pay the remainder of my deductible and OOP for all my prescriptions after that....And while some of our prescriptions would be covered at no cost to us, my DH has 2 prescriptions that are not available in generic and we would have to pay OOP for them.....

You may want to check into a HSA, not associated with your employer. My employer only does FSA's, but I have a HSA through a bank. It's great! No annual fees (our employer sponsored FSA had a $2/month fee) and I get interest too (albeit 1.25%). I do pay after-tax, but then I get to subtract that amount on my gross income on my taxes - very easy.

Also, I too have no problems asking for scripts from my doctor for OTC meds. My boys have their annual wellness exam in September and I have a list of the 4 most common meds we use - three being allergy meds. At my annual visit I'm asking for scripts allergy meds and Tylenol too. (I likely won't use them, but just in case we fall short one month and the pollen blows in, I can use my HSA card with peace of mind knowing that I'm okay if ever audited.)

 

[rparmfamily]

My sentiments exactly!! Oh, he's making change allright....

Welcome to Disboards!

 

[swilshire]

Ditto. I mean, how much does one spend on OTC meds anyway?

We spend quite a lot. Just one example, Prilosec went from a script to OTC. That's about 50 cents a day for just that drug for me. Add in all the cold medicine for the kids and everything else and it's a lot of money. It's also very convenient if you have money left in the FSA at the end of the year to just stock up on OTC meds. Guess I'll have to plan more carefully in the future.

Sheila

 

[tinker&belle]

A $2500 cap wont cover my deductible!!! That means after that initial $2500 is gone, then I have to pay the remainder of my deductible and OOP for all my prescriptions after that....And while some of our prescriptions would be covered at no cost to us, my DH has 2 prescriptions that are not available in generic and we would have to pay OOP for them.....

Can you use an HSA instead of an FSA? The limit is much higher and you don't lose the money at the end of the year.

 

[Disneycrazymom]

My guess is that those of you who "have no problem asking the doctor for a script for the OTC meds" have good ins with a low co pay. I pay $30 in copay for our primary and $50 for a specialist. Our scripts are expensive too. DH owns his own small business and our deductibles are high too. No way can I go into the doctor for small stuff. I was overjoyed when the allergy meds went OTC. We are in the process of trying to figure out next years insurance plan and yes the cost is going up. There is so much more I would like to add but the Dis is not political......