Angie's List: Health Care Spending Accounts
A big change in federal tax law is making it more important that ever to have an established relationship with your primary doctor.
In this week's Angie's List, Jim Donovan shows you how to get the most out of your health care spending account.
Until recently flexible spending accounts made it easy to get reimbursed for over the counter medications. Now anyone looking to get money back will need their doctor's help.
"In order to use your spending accounts for over the counter drugs you're going to have to get a prescription from your doctor which can seem cumbersome but if you plan ahead it can be pretty easy. When you are going in for your annual checkup, get a list of the medications that you use and talk to your doctor about those medications so you can get the prescriptions ahead of time and not having to go back and getting additional prescriptions," said Angie's List founder, Angie Hicks.
And keep in mind those flexible spending accounts aren't limited to medications.
"Many consumers don't even realize the things they can use their flex savings accounts for. For example, if you have a disability and you need to have something changed in your car so you are able to drive or if you need ramps or your bathroom fitted because you have a disability - those are potentially expenses that you can run through your flex spending account. Additionally if you have a hearing loss or need hearing aids or need a special TV or telephone. Many consumers don't even realize these expenses are also applicable," said Hicks.
What that means for consumers:
• You'll need a prescription from your doctor for those OTC drugs.
• It's more important than ever for FSA users to review their medical spending habits and strategically estimate the year's medical needs so they can designate the right amount into their accounts before the next open enrollment session.
• FSA and HRA holders are now required to submit receipts showing the prescription number and payment information for any OTC medications to their plan administrator.
• Those with HSA's are not required to submit documentation, as HSA's are instead handled between the cardholder and the IRS. However, it is the holder's responsibility to have that documentation ready should they be audited. If found to use HSA dollars for ineligible products, including OTC medicines without a prescription, the amount is treated as taxable income and will be taxed at 20 percent. HSA balances can typically carry over from one year to the next, though.
Money Saving Advice:
• To avoid having to spend money on co-pays and doctors visits every time you want to purchase an OTC medicine, talk to your doctor ahead of time about your needs. He or she will likely be more inclined to work with you on this if you've already established a good relationship.
• Have a list of what you generally buy so you can get everything you need prescribed in one doctor's visit.
• Ask about virtual visits that allow you to email your requests in and avoid an office call altogether. Virtual visits are convenient, and can cost less than an in-person visit.
For those who must use their funds by the end of the year - and can't, or don't want to bother with getting prescriptions filled - there are other medical items you can purchase with your health care spending account that you might not ordinarily think of:
• Use your funds for items like glasses, bandages, braces and supports, ice packs, thermometers, and personal medical supplies.
• You can use your allocated health dollars to join a weight loss program, if it is for treatment of a specific disease, visit a chiropractor or see an acupuncturist. Those with diagnosed hearing loss can purchase qualifying specialty televisions and telephones.
• A health care spending account can even pay to reconfigure an automobile to accommodate a disability, or to modify your home to accommodate a medical condition. It can also pay for the cost of removing lead-based paints from your home.
• Visit for a complete list of qualifying and non-qualifying purchases, or call your plan administrator or human resources specialist to be doubly sure you're following the rules.
