It turns out both businesses and their employees are upset about how health care reform butchered flexible spending accounts (FSAs). A recent survey by the Midwest Business Group on Health found that two provisions affecting FSAs fall into the top five provisions employers most want removed from the reform law.
This year saw the elimination of popular and widely accessible parts of what is still loosely called the “flexible” spending account. For one, the FSA can no longer be used to purchase over-the-counter medications unless prescribed by a doctor. When was the last time your doctor wrote you a prescription for Tylenol? This change alone rendered the account much less useful to workers with few health expenses beyond the annual sniffle. Gone are the days of contributing $100 for annual Advil and NyQuil needs. In addition to the ban on over-the-counter meds, in 2013, the reform will place a $2,500 annual limit on FSA contributions, making the account much less useful to workers planning large medical expenses. Gone are the days of buying Suzy’s braces with pretax dollars.
If the account won’t cover small daily expenses or large annual expenses, how useful is this program? And is FSA reform making health care more affordable and accessible, according to the goals of Obama’s health care laws?
These questions may have helped motivate Senator Kay Bailey Hutchison (R-Texas) to introduce The Patients’ Freedom to Choose Act in the Senate and Representative Erik Paulsen (R-Minn.) to introduce similar legislation in the House. The bills would repeal both FSA reform law provisions and return the “flexible” function to the flexible spending account.
