Items such as allergy pills and heartburn medication will soon be a little trickier to buy with the pre-tax dollars consumers put in flexible spending accounts.

Under new rules that go into effect Jan. 1, people will be required to have an order from a doctor if they want an over-the-counter drug purchase to be reimbursable from their flexible spending account.

Right now, no such order is required.

Exact guidelines still are being worked out. The new rules are triggered by provisions in national health care reform legislation.

But the consensus among experts is the new rules will apply to all over-the-counter drugs. That includes everything from pain relievers and flu medications to acne treatments and baby rash ointments.

Nondrug items will be exempt from the requirement.

That includes items such as bandages, crutches and contact lens solution.

In short, people still can buy the same types of products with flexible spending dollars. But for over-the-counter drugs, they will have to take the extra step of getting a doctor’s note to be reimbursed.

“It’s just going to take a little more effort,” said Missie Pustejovsky, immediate past president of the local chapter of the Society for Human Resource Management.

Flexible spending accounts allow consumers to contribute pre-tax dollars from their paychecks to pay for out-of-pocket health care expenses. The list of allowable items is broad.

One potential drawback, though, is that FSAs have a “use it or lose it” aspect. Workers designate how much money they want put into their account each year and forfeit any portion that goes unused.

That’s where over-the-counter items have come in handy, Pustejovsky said.

“That was something easy for you to go use your money on so you wouldn’t lose it,” she said.

Minimizing hassle

Jody L. Dietel, executive director of Save My Flex Plan, a campaign funded by the FSA industry, agreed the new rules will be a hassle. The good news, though, is that over-the-counter purchases make up less than 10 percent of flexible spending, she said.

To minimize the hassle, the industry is pressing for the rules to be worded so consumers would only have to have a letter from a doctor.

If a formal prescription is required, that could mean a pharmacist would have to dispense over-the-counter drugs in order for them to be FSA-eligible. That would restrict where and during what hours people could shop, she said.

Once rules are finalized, national FSA firms plan to launch education campaigns aimed at customers, Dietel said.

Similarly, local human resource directors are discussing how to inform workers, Pustejovsky said. FSA plans typically run from Jan. 1 to Dec. 31, with the sign-up period being in the fall. Because of that, many employers will likely wait a few more months to address the issue, she said.

“I think communication is going to be key,” Pustejovsky said.

Another upcoming change regarding FSAs is that starting in January 2013, contributions will be capped at $2,500 annually per worker. Right now, federal law does not set a maximum, although most companies cap contributions.

Only 20 percent of people who have a FSA contribute more than $2,500 annually, Dietel said. But the impact on them could be great because they tend to have high out-of-pocket costs. People with chronic health conditions and families with severely disabled children are examples, she said.

Even consumers who do not fall into that category need to take note of the cap, Dietel said. People who are considering elective procedures such as LASIK eye surgery or cosmetic dental work may want to get them done sooner than later so they can use pre-tax dollars to pay for them, she said.

People’s savings with flexible spending accounts vary depending on their income tax bracket. But because contributions also are shielded from Social Security and Medicare taxes, people generally save 25 percent to 40 percent by paying expenses with FSA dollars, she said.

Even after the cap is in place, consumers should consider using a FSA as a money-saving tool, Dietel said.

Only 20 percent of eligible workers participate in such plans, she said.

“It’s absolutely still a substantial tax benefit for people,” she said. “Deductibles and co-payments will not go away.”

cculp@wacotrib.com

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