OTC? Get a prescription for that

Workers opting into flexible spending accounts are getting a bit of a surprise this year: If they want to set aside pre-tax dollars to help pay for over-the-counter drugs, they’ll have to get a doctor’s prescription first.

The word has been out there for some time that the regulations governing flexible spending accounts are changing. But with the annual open enrollment period under way, many people are just now finding out about it and what it might mean for them. It applies to the drugstore essentials that most of us buy over the counter – such as pain relievers, antihistamines, heartburn medication, and cough and cold remedies. (Insulin is exempt, as are supplies and devices such as crutches, blood sugar test kits and contact lens solutions.)

According to Kaiser Health News, it’s strictly a money move:

Tightening up the tax break on over-the-counter purchases will generate an estimated $5 billion in federal revenues through 2019, according to the Joint Committee on Taxation. That figure represents revenue related not only to FSAs but also to health savings accounts, health reimbursement arrangements and Archer medical savings accounts, all of which are also affected by the change.

If you only occasionally use over-the-counter products, this change may not be a big deal. Many people have probably never bothered setting aside pre-tax dollars for OTC medications, figuring the paperwork wasn’t worth the hassle.

But some households undoubtedly will be hurt, especially if they rely on over-the-counter medication for an ongoing condition – daily low-dose aspirin, for instance, or symptom relievers for allergies. For those on tight budgets, the combination of the tax break and the quasi-savings account for health expenses has been important for managing their finances. If they now have to see a doctor to get a prescription for an over-the-counter product, the inconvenience plus the expense of a co-pay for the office visit might outweigh the financial advantages of using their flexible spending account for OTC purchases.

Although most people dip into their FSA for prescription drug costs rather than over-the-counter products, those OTC items do add up. They account for about 25 percent of flexible savings account expenses, the Wall Street Journal reports.

It’s not clear what physicians think about all of this. The prospect of yet more paperwork to satisfy bureaucratic requirements isn’t exactly happiness-inducing. On the other hand, there’s something to be said for making doctors more aware of their patients’ over-the-counter consumption habits, if for no other reason than to avoid potentially risky drug interactions.

One potential benefit of the new flexible spending rule might be to make consumers more aware of how much they use and spend on over-the-counter products. There’s a tendency to regard OTC products as somehow “safer” than something that requires a prescription. Yet over-the-counter medications can easily be misused or overused, with consequences to the consumer’s health. Asking people to obtain a prescription before they can tap their flexible spending account for OTC expenses is a gentle reminder that over-the-counter products shouldn’t be taken too casually.

Photo: Wikimedia Commons

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