While I certainly have been a huge supporter of the health care reform legislation, and quite frankly think we should have gone way farther.(cough) Public option. (cough) I also think the whole effort on the part of Republicans to repeal HCR, is ludicrous, I am pretty keen about making minor tweaks that make sense in the legislation.
Per this post, they did vote to add an amendment to get rid of one requirement that would have seriously complicated the tax reporting requirements for small businesses.
In that same light, I have a very serious suggestion for another tweak they can make that would have an immediate impact.
Like many others who do their health care through their employer, I went through the process of doing our annual enrollment, which included the allocations one makes for Flexible Spending Accounts (FSA), also sometimes called a "Cafeteria Plan".
This account lets you stash away a designated amount of pre-tax money (you make that decision at that time for the entire year, no changes later on are allowed) per paycheck with the idea that it would be used to pay for medical expenses throughout the year....co-payments, medical services, medical supplies, dentistry, eyeglasses, and medicines. Basically, there was a list of those items that were considered eligible for reimbursement through these accounts, or for those who have an FSA debit card, you could use those funds to pay at a drugstore, or doctor's office.
Well, this past fall, we were notified that the new healthcare legislation had made some changes relevant specifically to FSA's. And it was a change that really stymied me.
Eligibility for Over-The-Counter (OTC) Items
As part of the new Health Care Reform legislation, the requirements for reimbursement of OTC medicines and drugs have changed. For expenses incurred on or after January 1, 2011, all OTC medicines and drugs must be prescribed by an authorized healthcare provider to be eligible for reimbursement from an FSA account. Prescriptions for OTC medicines and drugs must meet the same requirements as any prescription medicine or drug for the state in which the expense is incurred.
Since the new legislation is effective January 1, 2011 for any OTC drugs or medicines purchased in 2011, the new requirement will apply to items purchased during an annual grace period for unused participant FSA balances in 2010.
While we cannot provide specific product name brands, the below categories of OTC medicines and drugs will require prescriptions as of January 1, 2011. These include both ingested and topical forms.
Allergy & Sinus Medications
Feminine Anti-Fungal/Anti-Itch Products
Anti-Itch & Insect Bite
Rash Ointments/Creams (including baby)
Sleep Aids & Sedatives
Cold Sore Remedies
Cold, Cough & Flu
So, basically all of the things that one uses for things that generally don't require you go to a doctor.....now require that you go to a doctor if you want to use your FSA funds to buy them.
I, for one, certainly don't remember this provision coming up for any kind of discussion during the healthcare debate, but it's certainly right there in the legislation:
SEC. 9003. DISTRIBUTIONS FOR MEDICINE QUALIFIED ONLY IF FOR
PRESCRIBED DRUG OR INSULIN.
(a) HSAS.—Subparagraph (A) of section 223(d)(2) of the Internal
Revenue Code of 1986 is amended by adding at the end the following:
‘‘Such term shall include an amount paid for medicine
or a drug only if such medicine or drug is a prescribed drug
(determined without regard to whether such drug is available without
a prescription) or is insulin.’’.
(b) ARCHER MSAS.—Subparagraph (A) of section 220(d)(2) of
the Internal Revenue Code of 1986 is amended by adding at the
end the following: ‘‘Such term shall include an amount paid for
medicine or a drug only if such medicine or drug is a prescribed
drug (determined without regard to whether such drug is available
without a prescription) or is insulin.’’.
(c) HEALTH FLEXIBLE SPENDING ARRANGEMENTS AND HEALTH
REIMBURSEMENT ARRANGEMENTS.—Section 106 of the Internal Revenue
Code of 1986 is amended by adding at the end the following
‘‘(f) REIMBURSEMENTS FOR MEDICINE RESTRICTED TO PRESCRIBED
DRUGS AND INSULIN.—For purposes of this section and
section 105, reimbursement for expenses incurred for a medicine
or a drug shall be treated as a reimbursement for medical expenses
only if such medicine or drug is a prescribed drug (determined
without regard to whether such drug is available without a prescription)
or is insulin.’’.
(d) EFFECTIVE DATES.—
(1) DISTRIBUTIONS FROM SAVINGS ACCOUNTS.—The amendments
made by subsections (a) and (b) shall apply to amounts
paid with respect to taxable years beginning after December
Now, if one takes a look at it from a cost savings (i.e. revenue generation) perspective, this is a dumb change. Why? Because the amount of funds used to purchase these items is generally going to be quite small. Personally, when I determine how much money I'm going to allocate for my FSA, I am thinking in terms of money that will be laid out for doctor's office co-pays, prescription meds (which can be VERY pricey), vision care, dentistry services, etc. The amount of money I might use for OTC meds is generally not going to be a factor in that decision. So, what was the point?
The people who this change will directly affect the most are those in the middle class income brackets. People who live from paycheck to paycheck....people who might not have an extra $20 or $30 at the end of a payperiod to go buy some OTC meds when they fall ill with the flu or a cold, or other illness that generally doesn't need a doctor's visit. At least not until now.
Now let's watch this year as doctors are inundated with requests for prescriptions for basic things like pain relievers, cough and cold medicines, allergy meds, all of which have always been able to be purchased using one's FSA funds. At the very least, since these funds are "use them or lose them" by the end of the year, if you'd not used them up, you could at least make a last-ditch trip to your local drugstore and stock up on things you might need throughout the year so you didn't lose your money. YOUR money.
So, why was this change made? And isn't this something we should look at "tweaking" that would have a positive effect on those in the working class?