Republicans Move To Undo Restrictions On Flexible Spending Accounts
The federal health care law's restrictions on FSAs are under assault on a variety of fronts, even as the first of these changes kicked in last month. As of January, FSA account holders can no longer use their pre-tax earnings to buy over-the-counter medicine like aspirin or antacids unless they have a doctor's prescription.
Next week, Sen. Kay Bailey Hutchison (R-TX) and Rep. Erik Paulsen (R-MN) are planning to file bills undoing that limitation. Their legislation also would eliminate the law's $2,500 annual cap on contributions to FSAs, scheduled to take effect in 2013.
As Kaiser Health News reports, companies that administer these accounts are bolstering these efforts. For weeks they've been lobbying lawmakers and staff and helping put together economic arguments against the changes.
They've also been collecting stories of unhappy FSA customers like this one from John of Alabama, posted on savemyflexplan.org:
I just tried to use a prescription to obtain an over the counter med for my son - a simple bottle of childrens Motrin that his doctor recommended for him while he had a fever. I had the Dr provide an Rx for the Motrin, but when I tried to use the Rx at the pharmacy, they were confused about how to charge it to the FSA card.
But repealing the OTC rule isn't painless: it would deprive the government of $600 million a year in revenues that are intended to help pay for health coverage for those who can't afford it. Undoing all the FSA restrictions would lower revenues by more than $2 billion a year.
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