This year, flexible spending accounts or FSAs get a little less flexible. There have been some changes in the rules of when you can and can’t use them. Because of changes in the law, 2011 will be different. Here is what you need to know and how you can work with the new rules to make sure that you can still get the health care and supplies that you need.
First of all, let us review what an FSA is. It is an account through your workplace. In this account, you can set aside money that is removed from your income before taxes. In other words, this money is not taxed. The account can usually be accessed thought the use of a card (like a credit card). It can only be used for healthcare related expenses.
In 2010 qualifying items that could be purchased with an FSA included over-the-counter medications and supplies. This meant that bandages, pain relievers, diabetic supplies and even itch cream would be covered and purchased under the plan.
In 2011, over-the-counter medications and supplies can no longer be purchased using an FSA account. Your FSA account can still be used for doctor visit co-pays, prescription eyeglasses or contacts, hospitalizations and prescription medication or prescription supplies.
It is important to note that these changes took affect on January 1st and is based on the tax year, which is the same as the calendar year. The tax year ends on December 31st. Your individual workplace benefit year may be different, staring in June and lasting until the end of May of next year, for example. Regardless of when your workplace benefit year plan starts, the new rules still started on January 1st regarding what is eligible for the FSA.
You may not know that physicians can write prescriptions for over-the-counter medication and supplies. If you have a doctor’s official written prescription for an over-the-counter item, then it should be able to be covered under your FSA account.
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