Rules change for flexible spending accounts
Over-the-counter medications will no longer be an eligible FSA expense in 2011.
This is the time of year known to millions of workers around the country as the fall "open enrollment" period. Only this time, an estimated 33 million workers who have medical flexible spending accounts will need to be aware of new restriction that go into effect on Jan. 1.
If you are in this group, you are probably deciding how much of your pretax salary to divert into your account for next year or how to spend what's left in your 2010 FSA so you don't forfeit it under the annual "use it or lose it" rule.
You may want to use what's left to buy any over-the-counter drugs you use.
Here's why: Under new rules mandated by the March health reform law that go into effect Jan. 1, you can no longer spend FSA dollars for over-the-counter medications unless you have a prescription or letter of medical necessity from a doctor. The one major exception is insulin, which you can still buy with FSA dollars even in places where you get it without a prescription.
Moreover, FSA debit cards, which make it convenient to use the accounts to pay for out-of-pocket medical expenses, will no longer work for over-the-counter drug items, even if you have a prescription or letter. Instead, you'll have to pay out-of-pocket and then submit a reimbursement claim.
During the transition period, while drugstores reprogram their computers, FSA debit cards also may not work at some stores for non-drug items, such as contact lens solution, that you can still use your FSA for in 2011. FSA debit cards should still work for prescription drugs.
Even if your employer allows you a couple of months into the new plan year to use up the previous year's funds, this grace period will not apply when it comes to over-the-counter medication.
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
ABOUT SMART SPENDING
LATEST BLOG POSTS
Use your organizing skills to make sure your financial house is in order too.
VIDEO ON MSN MONEY
BLOGS WE LIKE
MUST-SEE ON MSN
- Video: Easy DIY smoked meats at home
A charcuterie master shares his process for cold-smoking meat at home.
- Jetpacks about to go mainstream
- Weird things covered by home insurance
- Bing: 70 percent of adults report 'digital eye strain'