Consumers used to just running down to the pharmacy or grocery for a bottle of cough syrup or antacid will have to change their ways next year if they want those costs covered by their flexible health care account. Reimbursement for those types of medicines will still be available – but it will require a prescription first.
“This is a big change in federal tax law and savvy consumers will be talking to their doctors now to get those prescriptions in place,” said Angie Hicks, founder of Angie’s List, the nation’s leading provider of consumer reviews
on local service companies and health care professionals.
The rules are effective Jan. 1 and cover anyone using a Flexible Spending Account (FSA), Health Savings Account (HSA) or Health Reimbursement Account (HRA.) Purchases of over-the-counter medicines without a doctor’s prescription can be denied or considered ineligible for reimbursement. Traditionally consumers have been able to purchase these medicines at will, having only to retain the receipt for reimbursement.
Most FSAs require consumers to use the funds within a designated 12-month period. Money unspent in the account is lost. Because no one wants to give money away, many FSA consumers check their balance shortly before the period ends and go on a shopping spree to stock up on ointments, cough syrup and pain relievers they may need in the future.
Under the new rule, FSA and HRA holders will be required to submit receipts showing the prescription number and payment information for any OTC medications to their plan administrator. Those with HSAs are not required to submit documentation, as HSAs are instead handled between the cardholder and the IRS. That information will be critical should the holder be audited. Those who use HSA dollars for ineligible products will have those dollars taxed at 20 percent.
Hicks said that change makes it more important than ever for FSA users to spend time estimating medical needs and talking with their doctors so they can designate the right amount into their accounts before the next open enrollment session.
“You can avoid having to visit the doctor every time you get a headache or your child gets the sniffles by talking to your doctor ahead of time about what to realistically expect,” Hicks said. “He or she will likely be more inclined to work with you on this if you’ve already established a good relationship. Have a list of what you generally buy so you can get everything you need prescribed in one visit.”
Another idea is to ask about virtual visits that allow you to email your requests in and avoid an office call altogether. Virtual visits are convenient, and can cost less than an in-person visit.
For those who must use their funds by the end of the year – and can’t, or don’t want to bother with getting prescriptions filled – there are other medical items you can purchase with your health care spending account that you might not ordinarily think of, like glasses, bandages, braces and supports, ice packs, thermometers, and personal medical supplies.
You can use your allocated health dollars to join a weight loss program, if it is for treatment of a specific disease, visit a chiropractor or see an acupuncturist. Those with diagnosed hearing loss can purchase qualifying specialty televisions and telephones.
A health care spending account can even pay to reconfigure an automobile to accommodate a disability, or to modify your home to accommodate a medical condition. It can also pay for the cost of removing lead-based paints from your home.
for a complete list of qualifying and non-qualifying purchases, or call your plan administrator or human resources specialist to be doubly sure you’re following the rules.
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