What would Pres. Obama do with an FSA?
If you follow the daily news cycle, you cannot ignore how heavily discussed health care reform is. Each day a story breaks about the implications of health reform whether it has a positive spin or negative commentary.
What does a Flexible Spending Account have to do with it? And, more importantly, why does it matter if President Barack Obama has an FSA?
The New Yorker humorously chronicled what would be President Obama's "open enrollment" decisions. Of course, the FSA made an appearance!
"He was annoyed to find that he had not used up the amount he’d set aside last time, since now that money would disappear. He was about to type zero dollars into the field when he saw that there was a whole list of items and services you could purchase with your flexible spending account, and the list was huge. Nasal spray was covered. Tylenol. Massages? He entered the same amount as last time, and wrote himself a reminder: “Get massages. Use flexible spending.” - Via The New Yorker.*
Note: The costs of a massage just to improve general health don't qualify. However, if massage therapy is recommended by a physician to treat a specific injury or trauma, then it would qualify. To show that the expense is primarily for medical care, a note from a medical practitioner recommending it to treat a specific medical condition is normally required.
Health Reform FSA Implications
Now, let's get back to health reform. Here is how the Affordable Care Act is changing Flexible Spending Accounts:
2011 OTC Prescription Changes
Since Jan. 1, 2011, over-the-counter medicines require a doctor's prescription. Thousands of FSA eligible products and medical supplies do not require a prescription.
- Non-Prescription FSA eligible products: Breast pumps, band-aids, shoe inserts, blood pressure monitors, steam vaporizers, saline solution, thermometers, and hot/cold packs.
If you're new to the FSA, here's the latest information you should know:
Flexible Spending Account plan years starting Jan. 1, 2013 are limited to annual contributions of $2,500 per person. That amount may not sound substantial, but don't fret.
You can maximize your FSA use by considering the following:
- Before you even enroll, think about possible health care expenses you might face for the year. It's especially easy if you rely on an FSA calculator to estimate these FSA eligible expenses including over-the-counter products, visits to specialists, and routine eye and dental care.
- The contribution limit is based on the rate of inflation and could therefore increase each year.
- Mercer's 2009 National Survey of Employer-Sponsored Health Plans estimated that employees only contribute $1,424 on average to an FSA. If you inch closer to $2,500, simply lay out how the FSA can best meet your needs. Remember that these plans offer significant tax savings as well (up to 40% on each dollar contributed).
- If your spouse can opt into the FSA then your shared contribution limit will go up to $5,000. Employers set their own contribution limits so it is best to check in with them about your individual plan.
- Monitor your FSA use throughout the year to ensure you're getting the most out of it before deadlines hit. It's your money and you wouldn't want to lose it.