Although most group health insurance plans won't cover over-the-counter medications, consumers have been previously able to purchase them through flex spending accounts (FSA). However, the recent tax changes which have gone into effect are making it more challenging for patients to have non-prescription treatments reimbursed from those health insurance accounts . This can be very frustrating, especially if you have a medical condition which requires treatment from sources which simply don't require a prescription.
What is FSA?
A flexible spending account (sometimes called a flexible spending arrangement) allows employees of a business to move a portion of their paycheck into a separate account before taxes are taken out. This money may be used for specific expenditures, most commonly child care expenses or health care. The benefits of an FSA are that the funds are then exempt from payroll taxes. However, there's a disadvantage in that the FSA funds must be used by the end of the calendar year, or they will no longer be available.
In many cases, doctors will suggest a non-prescription, over-the-counter treatment for certain conditions. Examples include allergy medications, knee braces, or other medical needs. Previously, consumers were able to purchase these items using their FSA debit card. However, rules have recently changed which require the primary physician to write a prescription in order to obtain reimbursement. This can be challenging, given the hectic schedules of doctors and the cost of a simple office visit. Statistics currently show that this change has led to a 90 percent reduction in the number of reimbursements which are requested for over-the-counter treatments.
If obtaining reimbursement for over-the-counter expenditures through your FSA becomes too complicated, remember that many health care expenses may be deductible on your tax returns. Health expenses can be deducted up to a certain percentage of your income, including the monthly costs for maintaining health insurance plans for yourself and your family.
Regardless of whether over-the-counter expenses may be reimbursed later on, a pre-tax savings plan designed to help offset out-of-pocket health care bills can be a tremendous benefit to families on a budget. Check to see if your employer offers FSA or HSA in order to take full advantage of these pre-tax savings account.