Reminder: Changes in FSA & HRA Reimbursable Items Effective January 1, 2011

The following was sent via e-mail to all staff on October 27 and is repeated here for your information.

If you have a medical flexible spending arrangement (FSA) or health reimbursement arrangement (HRA) through the Agency, we wanted to remind you that it’s about to become a little less “flexible.”

Effective January 1, 2011, new federal regulations require a doctor’s prescription for drugs purchased with FSA or HRA money, limiting purchases you can make through these tax-free plans. These new provisions, which are part of the Affordable Care Act passed by Congress in March, mean that you will no longer be able to purchase such items as over-the-counter cold, flu and allergy medications and pain relievers with FSA or HRA funds unless you have a prescription for them.

For example, if during an exam your doctor says, “give your toddler Children’s Tylenol,” ask him or her to write you a prescription so you can buy the Tylenol with FSA or HRA money. This will be handled the same as vitamins and supplements are currently handled; Kabel Business Services will need a doctor’s prescription with each claim submission, and it must state what drug the doctor is prescribing and for what medical condition.

The good news is the new rule pertains only to drugs and medications—you can still purchase over-the-counter medical supplies such as crutches, medical-testing kits and joint supports and standard items such as Band-Aids and contact lens solution using FSA and HRA funds. Reimbursement for prescription eyeglasses is also still allowed, as is reimbursement of insulin without a prescription.

However, you will not be able to use your FSA debit card for over-the-counter items after December 31, even if you have a prescription from your doctor. Smart FSA and HRA users may want to stock up on over-the-counter medications before January 1.

Another change relating to medical FSAs is coming in 2013. That’s when the government puts a $2,500 cap on money you can put in a medical FSA, which is half of what Heartland currently allows you to put in your medical FSA. Heartland will need to implement the $2,500 cap beginning with the June 2012 FSA enrollment.

In summary, medical co-pays and deductibles, medical supplies without a prescription, dental and vision expenses, and over-the-counter medicines without a prescription purchased in 2010 but not reimbursed until 2011 are all still expenses eligible for reimbursement after January 1, 2011. Over-the-counter medicines without a prescription that are purchased after December 31, 2010 will not be eligible for reimbursement under either your FSA or HRA.

Questions about which items are eligible for reimbursement after December 31, 2010 may be directed to Kabel Business Services at (515) 224-9400 or (800) 300-9691. Questions about Heartland's FSA and HRA plans can be directed to Kathy Martin, Benefits Specialist, at kmartin@aea11.k12.ia.us.