Health care reform legislation had to pass so that we could see what is in it:
THANKS to the sweeping new health law, your flexible spending plan is about to become a bit less flexible.
Flexible spending accounts have long been a valuable tool for budget-wise consumers. They let you use pretax dollars to pay for eligible out-of-pocket health care expenses. You agree to set aside a certain amount each year, usually through paycheck deductions, based on what you expect your health care needs to be.
By using pretax dollars, you can reduce your overall cost for these items by about 20 percent, estimates Jennifer Calhoun, a principal with Mercer Health and Benefits, a consulting firm.
Another attraction had been the extremely generous list of eligible expenses — including deductibles and co-pays, eyeglasses and dental work, over-the-counter cold medicine, sunscreen and vitamins. But under the new law, starting Jan. 1, flex-spend users will no longer be able to submit claims for over- the-counter medicines unless they have been specifically directed to use them by a doctor.
The article tries to assure us that this isn’t so bad. But it fails, since it includes the following:
For many consumers, having to start paying for cough drops or Tylenol with after-tax dollars probably is not a big deal. But the change will probably be felt by people with chronic illnesses who depend on drugs that have gone from prescription-only to over-the-counter status, like Claritin or other allergy medicines, or heartburn pills like Pepcid, Ms. Calhoun said.
And there is another big flex-spend change ahead: starting in 2013 the annual limit that any employee may contribute to these plans will be restricted to $2,500. Many companies had allowed much more.
[. . .]
. . . chronically ill people and others who now aggressively use their flex-spend accounts (say, parents with two teenagers who need braces) will feel the financial squeeze of the lower maximum.
Take Susan Luskin of Hollywood, Fla. Ms. Luskin, 58, suffers from Crohn’s disease, an inflammatory intestinal condition. And her husband, Paul, 61, is being treated for diabetes, high blood pressure and high cholesterol. Together they spend $350 a month on co-payments for prescription drugs.
Those costs, along with doctor visits and the over-the-counter vitamins Ms. Luskin must take for deficiencies caused by her disease more than absorb the $4,000 flexible spending contribution her company allows. “And that doesn’t include any vision or dental bills,” Ms. Luskin said.
“When the new limit comes in, I’ll be paying more out of pocket and losing the tax break,” Ms. Luskin added. “People on a tight budget who are ill will feel the difference.”
Shouldn’t we have known about all of this before the health care plan passed?