Flex-Ed: $92 billion package of healthcare bills proposes more "flex" for FSA owners
Healthcare legislation typically moves at a snail's pace in Washington, but over the past week a series of bills are being discussed that could expand the reach of flexible spending accounts (FSAs) more than we've seen since their debut in 2003.
We're not big on hyperbole at FSA Store, but this series of new regulations, if they become law, would be huge for FSA owners.
This week, in a special Flex-Ed, we're breaking down this news to examine the most important regulations that could help make FSAs an even bigger factor in your monthly budgeting.
(And if you're interested in all the potential changes to health savings accounts (HSAs), be sure to check out our companion article on the HSA Store Learning Center.)
A quick overview of this legislation
The House Ways and Means Committee approved a $92 billion package of 11 bills that could impact the American healthcare system at large. While these bills have cleared the committee stage, there is no guarantee that they will become law, or even be voted on in this legislative session.
But these bills signify what both consumers and the industry have pushed for in recent years and could form the backbone of legislation in the future.
Expanding the meaning of "qualified medical expense"
If passed, these changes would allow FSAs, HSAs and health reimbursement arrangements (HRAs) to reimburse for a bunch of new products -- including a potentially huge win that many believe is long overdue.
Why it's important: This is music to our ears! While account holders can submit a prescription to purchase OTC meds like Advil or Benadryl, this is a major obstacle to overcome. With this restriction lifted, account holders would be able to buy their healthcare essentials without needing extra documentation.
Quite possibly the biggest news to come out of this slate of bills is the expansion of qualified medical expenses to include menstrual care products! According to the National Center for Health Research, U.S. women spend about $3 billion per year on these products, and this new freedom to use tax-free funds can help women finally cut the cost of these essentials.
These expansions include certain sports and fitness expenses
The bill places limits on the types of expenses would be considered qualified medical expenses and places dollar limits on the amount of those qualifying expenses. Sports and fitness expenses that qualify as medical expenses under the legislation would be limited to $500 per year for single tax return filers and $1,000 per year to joint return filers.
Why it's important: With all of the FSA-eligible products that help you bounce back from workout soreness and sports-related injuries, including hot/cold packs, elastic bandages, and athletic braces, it was always strange that the IRS didn't directly cover account holders' efforts to get in shape in the first place.
For the first time, these new bills would allow fitness and sports expenses like gym memberships to become eligible with yearly caps on these types of expenses. This would be a huge development that could further broaden the appeal of tax-free accounts -- and hopefully encourage more account holders to embrace healthier lifestyles along the way.
Of course, we're a long way from seeing these bills enacted into law, so we're not planning the party just yet. But every journey begins with an idea, and these proposed legislations could potentially change the face of tax-free healthcare.
New to FSAs? Need a refresher course in all things flex spending? Our weekly Flex-Ed column gives you a weekly dose of FSA Living 101, offering tips for making the most of your tax-free funds. Look for it every Thursday, exclusively on the FSAstore.com Learning Center.