Health care reform brings flex account changes

With health care reform come two big changes to flexible spending accounts: a $2,500 limit to contributions, effective in 2013, and a doctor's prescription required for over-the-counter drug purchases, effective now.

"It used to be that you could use flex spending accounts to purchase any manner of over-the-counter pharmaceuticals and even some devices. It was flexible," says Thomas McAuliffe, a policy analyst for the Missouri Foundation for Health. Flex account users purchased items from a list of qualifying items, submitted the paperwork and were reimbursed for them.

"Currently, the law says that is no longer acceptable. You cannot use your flexible spending account for over-the-counter drugs, but there is a caveat. You can use it for over-the-counter drugs, but you have to have a prescription from a doctor," says McAuliffe. Now, after users get a prescription and obtain their drugs or other health care items, all paperwork is submitted to the company managing the flexible spending account.

And beginning in 2013, flex account users will only be able to set aside $2,500 for their medical expenses.

According to McAuliffe, the changes may be a way to address the "use it or lose it" rule that comes with flex spending accounts -- few people contribute to their FSAs, and those who do are likely to stash the money away and not spend it, thereby losing it at the end of the year, he says.

"The fact is that few employees actively contribute to their FSAs. Only 20 percent in 2010 contributed to a flexible spending account," says McAuliffe. He adds that over-the-counter drug purchases are a small portion of FSA spending -- only 7 percent in 2009.

"Use your flex spending account -- don't just put the money in there," says McAuliffe. Users should start planning at the beginning of the year how they will use their flex account money, he says. With the new rules, McAuliffe says it's also become more important to have a relationship with a primary care physician.

"Don't be afraid to ask your physician if there are cheaper or generic drugs that will do the same work that a brand-name one will do," he says. "Having communication with your physician and mapping out how to best manage your condition is the way to really save money and maximize your money."