FSA Friday - 11/2/18 - A real-world look at FSAs and the cost of feminine products
Update: As of March 2020 with the passage of the CARES Act, the OTC Rx requirement has been repealed and prescriptions are no longer necessary to purchase over-the-counter medicines with an FSA or HSA. Additionally, menstrual care products like tampons and pads are fully FSA-/HSA-eligible.
"Menstrual equity" - this is a term I wasn't even aware of a few years ago, but now occupies a good chunk of the conversations I have when discussing flexible spending account (FSA) eligibility.
And with good reason! While we love that so many products and services are able to be covered with tax-free funds, there's no doubt that some things probably deserve more consideration.
Since this is an ongoing debate -- one that we're likely to continue covering until changes are made -- let's take another look at the subject … this time, from a dollars and cents perspective.
What Life Would Look Like Without the 'Tampon Tax' - Hannah Recht, Bloomberg
It's pretty clear where Bloomberg stands on the subject, given how author Hannah Recht opens this piece: "Band-aids—check. Condoms—check. Sunscreen—check. Tampons? Nope, sorry."
We'll admit it, that's about as strong an opening line as you could want from an article about healthcare finance. But this discussion of qualification and eligibility affords writers a little more emotion than usual. Because in the eyes of most FSA holders, the fact that feminine products like tampons aren't eligible makes no sense, even if the IRS currently disagrees.
(To be fair, they're not ignoring it on Capitol Hill -- the House passed a bill in July that would add menstrual products to the list of FSA- and HSA-eligible products. But the Senate hasn't yet addressed the bill.)
To recap, because periods are considered a healthy function of the body, and not a medical condition to be treated, tampons and sanitary napkins technically don't qualify.
So, even though most women will use these products regularly, they're not eligible for the savings FSA and HSA owners enjoy for other qualified medical items. It's become known as the "tampon tax" -- and from what we learn in the article, it's adding up for those affected by it.
In the article, Recht goes into painstaking detail (with supporting visuals) to illustrate just how expensive these products are… and how much customers could save if the IRS changed its stance on eligibility.
We can't cover them all here (we strongly encourage you to read the article) but one number that jumped at us immediately is how this rule means up to 30% of a woman's budget for menstrual products goes to paying taxes for the items.
After payroll taxes are deducted from the paycheck, customers still need to pay sales tax on tampons, which dramatically lowers the amount of product they'll get for their money. In situations where money is tight and budgeting is a concern, buying tampons shouldn't be something they need to worry about. But that's exactly what it's become.
With 14% of American girls and women living below the poverty line, this need is only growing across the nation.
What's interesting is that some states (like Nevada) are considering waiving sales tax on menstrual products to help alleviate these costs. But the future of this proposal isn't clear. It was attempted in California, but vetoed shortly after.
This hot-button issue isn't likely to be resolved right away, but articles like this can only help shed some real-world light on a topic that's been shrugged off for far too long. Check out this article to see how well the finances are broken down.
FSA Friday is a weekly roundup of the latest topics, tips and headlines to keep you updated on all things flex spending. It appears every Friday, exclusively on the FSAstore.com Learning Center. And for the latest info about your health and financial wellness, be sure to follow us on Facebook, Instagram, YouTube and Twitter.