FSA Friday - 12/28/18 - The biggest flex spending stories of 2018
When all is said and done this coming Monday night, 2018 is going to be remembered as a landmark year for headlines. And healthcare benefits sat right in the heart of the matter. Over the course of the last year, we've covered a lot of news surrounding flexible spending accounts, healthcare benefits and overall wellness. But as the year progressed, several notable trends surfaced, and we started seeing these themes repeat themselves week after week.
There are too many topics to cover them all here. (Don't think we aren't thinking long and hard about millennial approaches to healthcare, or the rise of telehealth treatment!) But when our team looks back at 2018, we're going to remember these developments and trends.
Childcare costs are changing benefits decisions
Maybe writing about growing childcare costs isn't exactly surprising these days. But when we came across research that showed just how much these costs have grown in the last few years, it became a lot more headline-worthy.
American families need to be prepared for these expenses, so they can choose the benefit plans that best serve their needs, including potential tax-free options for child care. The following headlines were released within the same week, from two very different regions of the country, showing how widespread the concerns really were.
First, the USDA determined that child care has become the third-largest expense for families. Working with family website Care.com, this story broke down average family costs for child care. The numbers were even higher than we expected, creating issues for a large percentage of families who need these services.
We were happy to see that these articles recommended dependent care flexible spending accounts (DCFSAs) to encourage families to set aside tax-free money for child care expenses.
That said, Care.com estimated only 55% of families have and use DCFSAs, which could mean they're not comprehensive enough in their current form. But it might also imply families need to learn more about them. And then they need to decide at open enrollment just how much money they'll set aside, since they can't change it once the year begins.
Perhaps even more concerning is what we learned from a report from Child Care Aware, which estimated that if you have two children in daycare, you're likely paying as much or more for their care than you are on a mortgage.
They also found in many states parents are likely to spend as much on childcare for a young child as they would to pay for a year at an in-state university. They found annual childcare costs exceed $20,000 in 22 states. Parents pay the most for childcare in Massachusetts, paying more than $34,000 annually.
The ongoing battle for "menstrual equity"
"Menstrual equity" is a term most people weren't even aware of a few years ago, but it's one that now occupies a good chunk of the conversations around FSA eligibility.
One of the best articles we read on the subject was What Life Would Look Like Without the 'Tampon Tax' by Hannah Recht from Bloomberg. And it was also our favorite opening line of the calendar year -- "Band-aids—check. Condoms—check. Sunscreen—check. Tampons? Nope, sorry."
A little jaded? Maybe. But in the eyes of most FSA holders, the fact that feminine products aren't eligible makes no sense. While 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 -- progress seems to be in a holding pattern.
The hangup seems to come from the purpose of these products. Because menstruation is considered a healthy function of the body, and not a medical condition to be treated, tampons and sanitary napkins technically don't qualify. This has become known as the "tampon tax" -- and from what we learn from this story, it's adding up for those affected by it.
The article illustrated just how expensive these products are -- up to 30% of a woman's budget for menstrual products goes to paying taxes -- making many wonder how much customers could save if the rules were adjusted.
New legislation sparks hope for the future of tax-free healthcare spending
This year, the House Ways and Means Committee voted in favor of a series of bills that would implement some major changes to consumer-directed healthcare plans, including FSAs and HSAs. While these changes are nowhere near the finish line, this legislation has our attention.
Under current IRS rules, FSA owners can carry unused balances of $500 or less into the following year. But, if this proposed legislation passes, all unused balances -- regardless of size -- can be carried forward to the following year.
In other words, it could be the end of "use-it-or-lose-it" as we know it. If passed, these changes could give FSA holders a lot more freedom to save and spend what they want, without rushing to meet deadlines.
Another big change was a rethinking of eligibility and accessibility, potentially lifting a lot of the paperwork around prescription requirements, and even feminine care products (like we mentioned a few paragraphs ago).
The reasoning for change is sound, since authors, employers and experts all seem to agree these changes would boost consumerism and enhance supplementary healthcare coverage for the public. We're still a long way from these bills being made into law. But they could bring major changes to the way our FSAs function.
Here's hoping we're discussing that very headline in 2019. Until then, Happy New Year from everyone at FSAstore.com!
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.