Flexible Spending Account Rules Changing

These accounts, which are tremendously popular and used literally by millions of Americans each and every year, are under fire. These accounts let you set aside some of your income in a tax free basis. You can then draw money from those accounts to pay for certain types of medical products and services. This is a convenient and useful tool for many folks.

Today, people who have flexible spending accounts can spend that money in a number of different ways. One of the avenues for their medical spending can be on medications that are available without a prescription. These over-the-counter drugs include things like medications for pain relief, medications to help address cold or flu symptoms, medications that help with allergies, or even medications that help with things like indigestion or hemorrhoids.

Beginning in January, however, these medications will not qualify under your flexible spending account. Unless you receive a prescription from a health care provider, you’ll have to pay for those products out of your pocket on an after-tax basis.

There are approximately 15,000 medications and products that this will apply to. Going forward, you’ll need to have a prescription for those products if you want to buy them with money from your flexible spending account.

The stated purpose, according to the medical insurance legislation, is to help raise revenues to cover the costs of the legislation. It isn’t known how much this move will actually further complicate things, as many people will now visit their health care provider for something as simple as a headache so that they can the purchase their aspirin with money from their flexible spending account.

There is a double-whammy in the legislation for flexible spending accounts, as well. Today, there’s no limit as to how much you can put in the account, although if you don’t use it by the end of the year you lose it. Beginning in 2013, there will be a limit to the amount you can contribute to the account of $2,500 per year.