Eligibility

Fridays (with Benefits) - 4/5/19 - We need more money and more flexibility

Speculation is fine. Speculation can be good. But speculation is meaningless if no one makes good on the promise. For almost a year, we've been speculating about necessary changes to health care, especially when it comes to flexible spending accounts (FSAs).

(What can we say - we're a little biased to FSAs around here…)

Well, nothing's in stone yet, but it seems like the discussion of expanding FSA eligibility, along with a slew of other needed changes, is at least part of the conversation on Capitol Hill. And the longer it is, the more likely we are to see real change come from the speculation. Our first article goes into the latest news from Washington regarding these accounts. Our second article highlights why these changes are so desperately needed.

Let's take a look…

House Introduces Bill to Bolster Consumer Health Savings - Consumer Healthcare Products Association (CHPA)

This is such a big story, we're featuring it here, and also in our HSA Headlines column. But we simply can't ignore the importance that a new version of the "Restoring Access to Medication Act" was introduced in the U.S. House of Representatives.

Various versions of this bill were introduced in the past, but this one has a major chance of passing with bipartisan support from Representatives Ron Kind (D-Wis.), Grace Meng (D-N.Y.), Jackie Walorski (R-Ind.), and Darin LaHood (R-Ill.).

Two major developments would come out of this bill if it was signed into law:

  1. The requirement to obtain prescriptions for OTC medicines with FSA/HSA funds would disappear.
  2. Feminine care products like tampons would be considered qualified medical items for the first time, making them eligible for purchase with FSA/HSA funds.

Allowing the purchase of feminine care products with tax-free funds is something we discuss a lot on this page, especially when the subject started being included in various pieces of legislation of late. But there seems to be something more going on -- something that appeals to both sides of the political aisle, so we'll be following this piece of legislation very closely in the months to come.

Americans Borrowed $88 Billion to Pay for Health Care Last Year, Survey Finds - Karen Zraick, The New York Times

That isn't a typo -- Americans borrowed an estimated $88 billion over the last year to pay for health care, according to a survey released on Tuesday by Gallup and the nonprofit West Health.

And because of these exorbitant costs, roughly 25% of Americans have skipped treatment, with nearly 50% fearing bankruptcy in the event of a health emergency. In fact, even in households earning $180,000 or more a year, roughly 1/3 of respondents said they were concerned about potential bankruptcy because of a health crisis.

As a result? Crippling nationwide debt, regardless of region, tax brackets or income levels -- people live in fear of getting sick and going broke. And they're avoiding the care they need because of it, making them sicker and ultimately in need of more money to pay for it.

It's a vicious cycle that starts and ends in Washington, which the article highlights in more detail than we can offer here. But it's a worthwhile read for anyone wondering just how hard people are being hit whenever they get sick… and how much harder it hits if they ignore their own health needs.

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Fridays (with Benefits) is a weekly roundup of the latest headlines about employee benefits -- from FSAs to fitness programs and everything workplace wellness. 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 and Twitter.

Living Well

Fridays (with Benefits) - 3/29/19 - When doctors take advantage of trust and convenience

"Ow, that's gotta hurt." These are words we expect to hear after leaving a doctor for a sports injury. But it's not what we expect to hear when getting the bill for that treatment. Obviously, medical treatment is expensive -- that's why we pay those hefty premiums, after all.

But when the treatment and products we receive are more expensive through insurance than they are out-of-pocket? Well, let's just say it's eye opening. And this week's article might just be the most extreme example we've heard in a while.

Price Of A Brace Brings Soccer Player To His Knees - Paula Andalo, Kaiser Health News

Esteban Serrano didn't go play soccer expecting it to make a major dent in his finances. But that's exactly what happened when he injured his knee during a friendly match in his neighborhood. And even though he attempted the tried-and-true "walk it off" method, the pain was too severe to ignore, so he headed to an orthopedist for a closer look.

Sure enough, Serrano didn't just "tweak" his knee -- it was a pretty bad strain of his medial collateral ligament (MCL). But thankfully, there was no tearing, so his recovery would consist of basic OTC pain meds and a standard knee brace for support.

Thinking that was the end of his struggle and that his insurance provider would handle the rest of the details, Serrano quickly put the incident aside and went about his life. Then the bill arrived, with some alarming numbers at the bottom.

His total bill for the office visit and x-ray, was pretty standard stuff -- a relatively conservative $315. But the sticker shock came from the $829.41 charge for a basic knee brace. Serrano's insurance provider only managed to cover $52 off the list price of $882 … again, for a knee brace.

And Serrano was being billed for the difference. Even though the brace (an item that's also FSA-eligible, we might add) is available for less than $250 from most retailers, Serrano was forced to pay this exorbitant price because his doctor provided it during the visit. We understand retail markup. We understand fees and costs. We don't understand how there could be a 300% markup on a basic neoprene and metal support brace.

We also don't understand how it wasn't clearly communicated during the visit that Serrano would be responsible for the majority of the cost. Sure, prices vary (and so do doctors, for that matter) but to casually leave that out of a 1:1 discussion? It's an oversight that we'll never understand, much less condone.

The article goes into more detail about the case, including what Serrano could have done during the visit to get ahead of these charges before they went through his insurance provider. For that reason alone, it's worth a few minutes to give it a read.

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Fridays (with Benefits) is a weekly roundup of the latest headlines about employee benefits -- from FSAs to fitness programs and everything workplace wellness. 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 and Twitter.

Accounts

Flex-Ed: I owe money on my tax return... an FSA could have helped

My jaw dropped when I received the email from my accountant. I stared at my tax bill in disbelief for a few minutes, but reality quickly set in: I owe the IRS over $3,000. As it turns out, I'm one of the taxpayers who had insufficient tax withholding throughout 2018 and now owes money due to the Tax Cuts and Job Act that became official last year.

As it turns out, I'm one of the estimated 30 million Americans who owe money on their taxes this year. I'm lucky enough to have the funds to pay my bill in full, but it's still painful to part with the money. In many ways, I should have known better. Because here's the truth: I did not have an FSA in 2018.

It's embarrassing to admit because I thought I had already learned my lesson about tax-free health accounts. But once again, life happened. So as a result, I missed the boat on opening an FSA in 2018, and now I'm paying the price (literally).

It's too late to change what happened, but it's not too late to learn from it. Here's how much money I might have been able to save on taxes if I had opened an FSA.

My health care costs

After tallying my health care expenses — doctor's appointments, prescription medication, dental treatment and FSA-eligible supplies — I spent nearly $2,500 on health care in 2018. Nearly half of that came from unexpected dental treatment, which was FSA-eligible.

But the truth is that I thought I spent much less on health-related expenses last year. In fact, when I estimated how much I would spend on health care in 2018, I thought that I would spend $700. In other words, I thought I would spend $800 less than I actually did. Yikes.

My optimistic estimate about my health care expenses is actually part of human nature and our overly optimistic predictions for the future. It's often known as the optimistic update bias. This is important to understand because it can help us plan more realistically for the future.

The FSA calculator

I was shocked when I finally sat down to look at how much money I could have saved with an FSA last year. According to the FSA Store calculator, I could have saved $1,816 on taxes. That doesn't mean that I would necessarily owe less in taxes (although I probably would because it would have lowered my overall taxable income) but I would have paid less in taxes upfront.

The real kicker is that my 2018 net pay would have been nearly $2,000 higher if I had put $2,500 into my FSA. Plus, according to the calculator, I could have "broken even"—not saved or spent any extra money—if I had spent at least $684 from my FSA. In other words, even if I had set aside $2,500, but only spent the $700 I thought I would need for 2018, I wouldn't have gained or lost anything. (Although I probably could have used my extra funds to buy FSA-eligible health supplies…)

How to avoid these mistakes

The truth about my health-related finances is that I fell into the trap of short-term planning. I had a lot of financial goals for 2018 — investing, travelling, preparing for graduate school — and I wanted to save as much money as possible, and in my effort to cut costs, I actually ended up spending more money in the long-run.

It's great to be optimistic about the future, but if there's one thing I learned this year, it's that a healthy dose of skepticism (and number crunching) is better for my budget and my sanity.

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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.

Accounts

FSA Friday - 2/22/19 - American health care is #1 … for the wrong reasons

It's not exactly "breaking news" -- United States citizens spend more on health care than residents of ANY other country. And sadly, this trend isn't showing any signs of slowing, with health care costs rapidly approaching 20% of our overall national spending.

Would you hand over one out of every five dollars in your pocket for anything else? Probably not, but that's exactly what U.S. citizens are doing right now -- and what they'll likely continue to do for the next decade or more.

Health care spending in America to consume 1 in 5 U.S. dollars - Aimee Picchi, CBS News

In this brief, but eye-opening piece from CBS News, we learn that the steady growth of U.S. health spending is projecting to be nearly 20% of all spending by 2027. And it seems like it's because the health care we're paying for is working! Baby boomers are living longer, requiring more medical treatment as they continue to age.

Because of this, the same forecasts predict Medicare spending will be the biggest chunk of this projected growth, rising 7.6% each year until 2027.

We might not be economics experts, but we do know that the 5.5% average growth of health care spending year-over-year exceeds the overall growth in national spending by nearly a full percentage point, widening a gap that many experts still can't get their heads around. The next article tries to decipher it for us...

How Americans spend much more on health care than they realize - Philip Moeller, PBS

This short piece from PBS wastes no time getting to the point -- U.S. households spent $980 billion on health care in 2017, which works out to more than $3,200 per person, according to the Centers for Medicare and Medicaid Services' annual report on health spending.

As it turns out, consumers are only directly paying for a third of that total. Don't get too excited, though, since we're indirectly covering the remainder through federal and state taxes, premiums and other fees. And even though it seems like employers are footing most of the bill for worker health care benefits, when good insurance comes at the expense of higher paychecks, it's still coming out of employee pockets at the end of the day.

Thankfully, the article and report clearly detail where your dollars are going, so you have a better idea of what those paycheck deductions really mean as national health care spending continues to grow. Transparency is key -- we may not ever get used to handing over 20% of our own money just to handle health costs, but we certainly deserve to know why.

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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 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 and Twitter.