Update: As of March 2020 with the passage of the CARES Act, the OTC Rx requirement has been repealed and prescriptions are no longer necessary to purchase over-the-counter medicines with an FSA or HSA.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. Learn more here.
Since open enrollment is well underway, and we're speaking to a growing group of new FSA owners, it's only right that we revisit one of our most-common questions -- why do we need a prescription to buy over-the-counter (OTC) meds with our FSA cards?
If you've wondered about this, we definitely understand your confusion. Obviously, if you wanted to purchase OTC products like ibuprofen or cold medicine with a standard form of payment, you wouldn't need a script for them. So why would you need to prove a medical need to use tax-free funds? Let's get one thing out of the way, it's a requirement imposed by the Patient Protection and Affordable Care Act (PPACA) and enforced by the IRS.
A quick history lesson
The answer dates back to January 1, 2011 -- a veritable lifetime in consumer healthcare years -- when the government passed PPACA. This law established a new uniform standard for medical expenses, meaning OTC products containing an active medical ingredient of any kind would require a prescription from a doctor.
But the government isn't doing this to make things more difficult, or even to discourage use of tax-free funds. Instead, the initial thinking was that this OTC provision would help raise revenue to expand coverage for uninsured Americans.
So, long story short, if you want to buy these products without having to pay taxes on them, you'll need to verify a qualified medical need for doing so. This includes the items mentioned above, alongside any other pain relievers, cold and allergy remedies, and even cough drops.
Some OTC favorites
It's not like the OTC rule applies to everything on our site - just things that contain an active medicinal ingredient. So, medical supplies like crutches, bandages and even diagnostic devices still qualify for FSA reimbursement without any other documentation. In fact, of the 4,000+ eligible items in our store, only a small percentage requires a prescription, so shop with confidence!
And to add to that confidence and create less confusion, we even make it easy for you to decipher which products require a prescription and which do not, with a simple check mark symbol for no prescription required and an Rx symbol for when it is.
Are there changes coming?
There's always hope, but we don't like to think of the OTC provision as "something to work around.". Does it make things slightly more complicated for FSA users? Maybe… but we have our own answer for this -- the Prescription Process.
By using this simple tool, if you purchase eligible OTC medicines at FSAstore.com, you just need to click on the prescription banner to get started. Then, you simply need to provide a physician's name, address and phone number, and our pharmacy partner will reach out directly for the required docs to help you obtain the prescription to complete the purchase. No other work is required.
So, reform might be underway in Washington, but at least you know you have a way to buy these products tax-free, with minimal fuss. Once you start seeing the savings, we think you'll realize it's about as effortless as can be.
From FSA basics to the most specific account details, in our weekly Asked and Answered column, our team gets to the bottom of your most-pressing flex spending questions. It appears every Wednesday, 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.
Health care should not be the federal government’s responsibility. That’s at least according to a recent Gallup annual Health and Healthcare poll, which found 56% of Americans believe ensuring that all Americans have health coverage is not a “government responsibility.” In 2006, the majority of Americans were still convinced the government should play a bigger role in creating access to health care.
While the implementation of the Patient Protection & Affordable Care Act (PPACA or ACA) and recent rollout of the health insurance marketplace have raised concerns about health care costs and coverage, Flexible Spending Account popularity has steadily increased as these plans are a great tool for out-of-pocket savings. These pre-tax accounts offer more than just a tax break – they’re another way to put away funds toward health care costs. Get more information about FSA eligible expenses.
Republican attitudes towards this issue have shifted the most over the last few years – increasing from 53% to 86% feeling the government should not be responsible for health care coverage. Among independents there has been a 28-point increase since 2000 as independents feel government involvement in health care should be limited. Democratic opinion shifted as well and increased by 11 points since 2000 – which Gallup reported is the “highest level since Gallup first asked the question.”
“The continuing implementation of the ACA over the coming months and years will surely continue to shape Americans' attitudes toward the federal government's role in this area. It is not clear how the ACA's troubled rollout to date will affect attitudes over the next year,” Gallup added. “But as the debate about the implementation of the new healthcare law has unfolded, Americans have become less likely than ever to agree that the federal government should be responsible for making sure that all Americans have healthcare.”
Browse thousands of FSA eligible products at FSAstore.com including first aid kits, breast pumps, blood pressure monitors and contact lens care. Our blog will help you with any questions you may have about your FSA.
As the U.S. prepares for open enrollment in the Health Insurance Marketplace, consumer health advocates worry about costs and access to care. In this recent New York Times article, consumer health advocates fear that the new Marketplace would limit the number of eligible providers and specialists accessible to participants. House Republicans have voiced concerns and threatened to defund Obamacare.
Even so, the point of the Patient Protection and Affordable Care Act (PPACA or ACA) is to make coverage both affordable and available. According to the ACA official text, information would be made readily available to consumers through an "Internet portal" helping them compare affordable coverage options. Individuals will be able to enroll in the Health Insurance Marketplace as of October 1 (more information can be found via https://healthcare.gov). Open enrollment for small businesses is delayed until November 1. Read more in our blog about the delay in online enrollment for many small businesses.
A Census Bureau report revealed that the number of Americans not covered by health insurance decreased in 2012, but there are still 48 million Americans who remain uninsured.
When is coverage affordable?
In order for coverage to be deemed affordable (as outlined on healthcare.gov), "as it relates to the Advanced Premium Tax Credit (APTC), the employee's share of the annual premium for self-only coverage [must not be] greater than 9.5% of annual household income."
Additionally, a health plan must meet a minimum value - it "meets this standard if it's designed to pay at least 60% of the total cost of medical services for a standard population."
Does my Flexible Spending Account help?
A Flexible Spending Account opens doors to eligible services not covered by your regular insurance plan. An FSA lets you pay for out-of-pocket expenses (deductibles, coinsurance and copays) when you visit health care providers such as dentists, chiropractors, acupuncturists, ophthalmologists and more. Find local FSA eligible services via FSAstore.com!
Starting in 2014, the Health Insurance Marketplace plans must also cover what are known as essential benefits. Theseessential benefitsinclude "ambulatory patient services; emergency services; hospitalization; maternity and newborn care; mental health and substance use disorder services, including behavioral health treatment; prescription drugs; rehabilitative and habilitative services and devices; laboratory services; preventive and wellness services and chronic disease management; and pediatric services, including oral and vision care."
The benefits of an FSA extend beyond coverage for eligible medical services as these accounts are pre-tax. You're saving up to 30% on medical expenses with an FSA.
Stay updated on all health reform and FSA news right here on the blog. Or, find FSA eligible products on FSAstore.com!
The Obama administration is delaying online enrollment for many small businesses. Businesses under 50 participating in states where the Small Business Health Options Program (SHOP) is federally governed will have to wait until November 1 to submit their applications online. They’ll still be able to browse options and submit their application in hard copy; they just won’t be able to submit the application electronically until November 1. Individuals will continue to be able to enroll online on October 1.
Both delays are not ideal for the Obama administration, but officials continue to point out that coverage and enrollment will not be delayed, and that individuals will be enrolled as they would have by January 1.Although the delay shouldn’t affect enrollment by January 1, it is likely to fuel on-going political debates over whether or not the law itself is sound enough to launch this year. To add to the mix, the Obama administration also announced on Wednesday that the Spanish version of the healthcare.gov website wouldn’t be ready for several more weeks, so enrollment for Spanish-speaking individuals would be delayed.
Check in on our FSAstore.com blog as we'll keep you updated on the latest health reform and FSA news.
It’s a source of anxiety for a lot of Americans: health insurance costs. According to a Rasmussen poll, 53% of Americans have an “unfavorable” position on the Patient Protection Affordable Care Act (PPACA), thinking that the new health reform law will increase costs.
“Whether directly from their wallets or through insurance policies, Americans pay more for almost every interaction with the medical system. They are typically prescribed more expensive procedures and tests than people in other countries, no matter if those nations operate a private or national health system.” (New York Times, June 2013)
The quote above is substantiated by an “International Federation of Health Plans 2012 Comparative Price” report. That report examines medical and hospital costs for different countries. One scary trend shows Americans are overpaying across mostly every category.
Be sure to regularly check in for health reform updates on our FSAstore.com blog. And, we'll keep you posted on all things FSA!
If you're scratching your head about Patient Protection and Affordable Care Act (PPACA or ACA) provisions affecting your business, you're likely not the only one. Starting October 1, open enrollment begins for the Jan. 1, 2014 PPACA mandated Health Insurance Marketplace, previously known as the Exchange. All employers must notify their existing employees of this Marketplace no later than October 1, 2013, regardless of open enrollment or employer coverage. As of October 1, any new employee should be given the notice immediately upon hire.
Why do I need to notify my employees of upcoming PPACA changes?
According to the Fair Labor Standards Act (FLSA) that's part of PPACA, all employees must be notified of coverage options available to them in the Marketplace. Notices must be provided to new hires within 14 days of their start date.
What should I include in the notice?
According to the Department of Labor (DOL), a written notice should be given to all employees:
1. "Informing the employee of the existence of the Marketplace (referred to in the statute as the Exchange) including a description of the services provided by the Marketplace, and the manner in which the employee may contact the Marketplace to request assistance;
2. If the employer plan's share of the total allowed costs of benefits provided under the plan is less than 60 percent of such costs, that the employee may be eligible for a premium tax credit under section 36B of the Internal Revenue Code (the Code) ift he employee purchases a qualifed health plan through the Marketplace; and
3. If the employee purchases a qualifed health plan through the Marketplae, the employee may lose the employer contribution (if any) to any health benefits plan offered by the employer and that all or a porition of such contribution may be exluable from income for Federal income tax purposes."
The notice should go out to each individual employee whether this employee works full-time or part-time. It should be written in a way that is understandable to the "average employee," the DOL added.
When should I notify my employees by?
IMPORTANT: If you are an employer subject to FLSA and haven't notified your employees about the Health Insurance Marketplace, you must do so prior to October 1. The notification applies even if your employees are already covered by a company health plan and regardless of your open enrollment date.
The DOL has provided a model notice to help you understand what should be communicated to your employees.
FSAstore.com reviews and provides guidance on any new regulations issued. Visit our blog frequently to keep up-to-date on the latest impacts of PPACA.
Health Benefits for Younger Employed Adults
"I’m young! I don't need extensive health insurance coverage!"
"I only visit the doctor twice a year; do I need more insurance coverage?"
These are dangerous assumptions even for the healthiest young Americans. October 1 is a big day as it launches the new Health Insurance Exchanges through which Americans can browse and buy insurance options. Check out more details on that in our Affordable Care Act and your FSA post.
We recently joined an online “Health Insurance for Young Adults” chat with WebMD health care reform experts, Lisa Zamosky and Dean Rosen, as well as Christina Postolowski from Young Invincibles, an organization dedicated to young adults.
“I don’t need health insurance since I’m healthy.”
According to Zamosky, this is a myth because young people are often confronted with health problems.
“About 16% deal with chronic illnesses that require them to seek care on a regular basis. And young adults between the ages of 19 and 29 visit the emergency room more than any other group under the age of 75, mostly due to accidents,” Zamosky said in the chat. “What's more, there's a significant amount of research that shows young people themselves recognize the value of health insurance to protect them both physically and financially. The biggest barrier to health insurance for this group has been cost, not a lack of interest in being covered.”
“I can’t afford to spend a lot on health insurance”
As Dean Rosen pointed out, young adults will be able to enjoy a few insurance options next year.
“While young adults may select from any of the plan types offered on the exchanges (e.g. PPOs, HMOs, EPOs) there are two types of plans that may be particularly attractive to young, healthy individuals: High Deductible Health Plans (HDHPs) and Catastrophic Plans,” Rosen said.
We participated in the discussion (as "FSAinfo") asking: "Do you think young employed adults know enough about the benefits of Flexible Spending Accounts? How can more awareness get raised?"
"Flexible Spending Accounts are a great option for many people, including younger adults. They give people some additional money to use - on a pre-tax basis - for health services they need. And, just like the name says, they are indeed flexible. The best way to get word out is through forums like this, and through employers," said Rosen.
Can I get an HDHP and an HSA? How can a Flexible Spending Account benefit me?
- A young employed adult would be able to get a Health Savings Account (HSA) with a qualified HDHP.
- If a young employed adult has an HDHP and a health FSA, then he/she cannot make contributions to an HSA - unless it is a Limited Purpose FSA.
Rosen makes a good point, “A HDHP is a health insurance plan that generally does not cover out-of-pocket expenses until an individual reaches his/her annual deductible (aside from expenses for certain preventive care identified by the plan, such as childhood immunizations, well-baby exams and periodic physicals). True to their name, HDHPs have very high deductibles. On the other hand, premiums for these plans are usually substantially lower than premiums for other plan types.” Health Care Reform also limits the amount that individuals will be responsible for out of pocket for all plans, so HDHPs may be a real solution.
Benefits of an FSA
- The FSA is pre-tax (no Social Security and Medicare taxes).
- You can start using your FSA funds on day one of the plan year.
- Your FSA can be used toward a variety of qualified expenses:
- Over-the-counter products.
- Over-the-counter drugs and medicines. These products will require a prescription to qualify for FSA reimbursement.
- FSA Eligible Services. You can visit many types of health care specialists ranging from your physician to dentists to dermatologists to chiropractors and more. Cover your co-pays, deductibles and coinsurance with your FSA!
To read the entire chat, go to http://live.webmd.com/Event/Health_Insurance_for_Young_Adults
What about my Flexible Spending Account (FSA)?
If you have an FSA, you might be concerned about how health care reform could affect your plan. Below is a small timeline of coverage changes that have occured so far to keep you in the loop.
Health Reform & FSA Timeline
Since January 1, 2011, over-the-counter medications have required a prescription to be eligible for reimbursement under a Flexible Spending Account, Health Savings Account or Health Reimbursement Account. Insulin is an exception to this prescription rule.
January 1, 2013:
- FSA contributions are limited to $2,500 per plan year. However, if you and your spouse have an FSA that means you could potentially contribute up to $5,000 per household! The contribution limit will be adjusted for inflation starting in 2014.
- According to a Mercer National Survey of Employer-Sponsored Health Plans, the average employee contribution to an FSA was $1,424 in 2009 – which shows that the contribution cap should not affect many participants. It’s still advisable to budget your FSA throughout the year and use an FSA towards eligible services and products as necessary (eligibility of products and services is outlined in your individual plan document).
Important to Know
- If your FSA plan has a grace period, any unused funds remaining for the grace period do not count towards the $2,500 limit for the new plan year.
- The $2,500 contribution cap is only applicable to the Health Care FSA. Dependent Care FSAs, Health Savings Accounts and Health Reimbursement Accounts are not affected (although most have their own applicable limits).
Employers can find details about compliance with the new limit via IRS Bulletin 2012-40.
The U.S. Department of Health and Human Services shows how health reform affects your state (in terms of insurance options) here.