Wednesday, August 11, 2010

Expect Personal Health Care Costs To Rise in 2011

If you or someone you know takes advantage of flexible spending accounts (FSAs) that enable an individual to deduct a set amount from their paychecks to be used for the payment of medical expenses, including drug purchases, you will be hit with a significant change in 2011 due to the Democrats' health care overhaul.

It's not a change for the better.

In fact, it can mean a significant increase in your costs and would essentially gut the purpose of FSAs. The entire rationale behind FSAs is to allow individuals to set aside a portion of their income tax free so that they can use it towards health care expenses. Those expenses include copayments, prescription and over-the-counter drugs, vision care, and certain listed medical expenses.

The change would eliminate the use of FSAs to pay for over the counter (OTC) drugs

OTC drugs are frequently cheaper than prescription drugs and include everything from pain medications to allergy medications. Effective January 1, 2011, the list of items that will require a prescription includes, but is not limited to acne medicine; allergy medicine; cough, cold & flu medicine; eye drops; indigestion medicine; laxatives; nasal sprays, drops; ointment for cuts, burns, rashes; pain relievers.

Items that will remain eligible without a prescription include, but are not limited to band aids, birth control, braces & supports, contact lens solutions & supplies, elastic bandages & wraps, first aid supplies, and reading glasses.

In other words, if you're taking allergy meds for seasonal allergies and don't need a prescription drug, you'll end up paying much more because your FSA will no longer cover and reimburse those costs. Instead, you'll either have to pay out of pocket or have to see a doctor to obtain a prescription, which means you may well still pay more.

This is just the tip of the idiocy contained within the health care overhaul and which runs counter to the very claims by President Obama that his plan would reduce health care costs. The FSA change does no such thing and in fact would raise costs considerably. It would force people to seek doctor care for conditions that were previously self-treated in order to obtain prescriptions, or would require people to pay those costs out of pocket.

It eliminates a major reason for FSAs, which expands the individual's choice of care.

For instance, if you have previously had a FSA and set aside $800 for various health care expenses, and spend about $250 a year on various medications, including allergy medications, pain relievers, and indigestion aids, you'll lose the FSA and the pre-tax benefit. That's not an inconsequential amount.

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