As part of the health care reform law enacted in March 2010, provisions of the Flexible Spending Accounts (FSAs) will change effective January 2011. The changes will affect the types of expenses that reimbursable through FSA and HSA (healthcare savings accounts).
The change
Currently, over the counter drugs are reimbursable FSA and HSA expenses. Effective January 1st, 2011, over the counter drugs and medicines will only be covered if purchased with a doctor’s prescription.
Some over the counter purchases will not be impacted. Purchases of over the counter insulin, bandages, medical devices, crutches, diagnostic test and eye glasses or contact lenses, will still be reimbursable.
Keep those receipts
Employees will need to hang onto specific documentation for reimbursement of purchases of over the counter drugs with a doctor’s prescription. Employees should be accustomed to retaining receipts, however in addition, they will need to retain:
§ A copy of the prescription (for the over-the-counter drug/medicine)
§ Information regarding the date and amount of the sale (i.e the receipt)
Required employee education
Open enrollment for 2011 will need to include educating employees on the changes to FSA and HSA benefits. Employees must be notified of the changes prior to making benefit elections for the 2011 benefit year.
While these changes are may seem significant, a study conducted by Hewitt & Associates finds that only 7% of all FSA purchases are for over the counter drugs or medications. Effective and early communication will be instrumental in promoting employee awareness and understanding of the new FSA and HSA rules.
Have additional questions or need assistance preparing for the FSA and HSA changes? Contact EvolutionHR today. We’re glad to help!
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