Healthcare Reform Impacts Your FSA

There were plenty of changes included in the healthcare reform act signed earlier this year. One that will start impacting everyone beginning January 1, 2011, is the change to items eligible for payment with flexible spending account dollars. The primary change is that FSA amounts cannot be used to purchase over-the-counter drugs.

Many employees across the country will have open enrollment for their benefit plans over the next couple of months. Keep this in mind when you are estimating your out-of-pocket expenses to determine how many pre-tax dollars to set aside for your FSA. You will still be able to use your FSA for co-payments, deductibles, prescription drugs, but for OTC drugs you will need a note from your doctor (essentially a prescription) in order to use your FSA account for it. If you have money left in your current FSA account for 2010, you may want to use it up by stocking up on all the OTC drugs you typically keep at your home. Take the tax discount on your drugs now since you won't be able to beginning next year.

In the future, limits on the maximum amount that can be contributed to an FSA account will also be imposed. In 2013, that limit will start at $2,500 per individual. That should get you thinking about whether you have any substantial healthcare needs and whether they should be addressed before 2013 when larger amounts can be contributed to an FSA account.

List of current FSA eligible expenses.