Washington, DC (Wednesday, December 01, 2010)
Unless Congress takes action during the upcoming lame duck session, Americans will be prohibited from using their pretax flexible spending account (FSA) contributions to purchase over-the-counter (OTC) medications like Claritin and Tylenol without a doctor's prescription beginning on January 1, 2011.
Providers, retailers, administrators and consumers have criticized the rule because it will reduce accessibility to useful OTC medications and increase costs for patients and the health care system. In opposition to the planned implementation of this restriction, numerous trade associations and consumer advocacy groups have called for the immediate repeal of this provision, or at a minimum, a two-year delay in the effective start date.
"This new policy will hurt consumers in an economy where every cost-saving device counts, and will result in massive confusion about how to purchase OTC products," wrote Joe Jackson, CEO of WageWorks, Inc. and Chairman of Save Flexible Spending Plans, a group that works to preserve the use of FSAs, in a letter to Congress. "Congress must act now to either repeal a policy that will result in costly, time-consuming and potentially harmful results, or act to delay it for up to two years to allow for an implementation that is more accommodating to the needs of consumers, pharmacies and drug stores, and less likely to incur unnecessary costs to the health care system."
Jackson and others expect that the rule will cause consumers to choose to either pay for OTC drugs without using FSA dollars or visit their doctors to obtain the required prescription. Not only will both choices force consumers to incur higher health costs, but additional doctor's visits will increase costs for the entire health care system, will waste patients' and doctors' limited time, and possibly even delay treatment due to an increased number of appointments.
Additionally, because pharmacies and retailers have not had enough time to develop systems that recognize the difference between prescribed and non-prescribed medications, consumers will no longer be able to use their FSA debit cards at pharmacies for the purchase of either prescription or non-prescription drugs, making the process even more confusing and inconvenient.
Industry Groups Call for Restriction Repeal
Building on the support for elimination of this faulty provision, a coalition of industry groups, including the National Association of Chain Drug Stores and the Consumer Health Care Products Association recently sent a letter to Congressional leaders that urged them to reverse the OTC provision before the end of the session.
"Prohibiting the use of FSA funds to purchase medicines, or requiring documentation from a doctor that OTCs are being used to treat a medical condition, would limit access and greatly reduce the cost efficiencies associated with these medicines," they wrote. Without repeal, they added, retailers will need at least two years' time in order to prepare to comply with the new law.
Provider groups have also lined up to show their support. The Tennessee Medical Association, which asked for a delay in implementation and additional guidance on the rule, stated that the provision would add a huge burden to medical practices for "meaningless visit[s]" and would be a waste of patients' and physicians' time and money.
Purchase of Cost-Effective OTC Drugs Should Be Promoted, Not Discouraged
Supporters of the repeal say that the use of OTC medications should be encouraged, rather than limited, in order to stay consistent with one of the most commonly-touted goals of health reform: cost reduction.
OTC medications have shown to reduce costs to both consumers and the overall health care system in multiple cases. For example, a 2004 study by Northwestern University showed that the treatment of upper respiratory infections with OTCs could save the system nearly $5 billion annually, compared to infections that were not treated. Heartburn research by Nielson showed that OTC medications saved the health care system more than $750 million annually.
"Over-the-counter therapies are a cost-effective and efficient way for Americans to stay healthy. It's simply ridiculous that Congress would force consumers to spend additional time and money to obtain a prescription for a drug that was approved for purchase without one. The best solution to this faulty clause is immediate repeal," said Jackson.
About Save Flexible Spending Plans
Save Flexible Spending Plans is a national grassroots advocacy organization that protects against the restricted use of flexible spending accounts. The campaign is sponsored by the Employers Council on Flexible Compensation (ECFC), www.ecfc.org, a non-profit organization dedicated to the maintenance and expansion of private employee benefit programs on a tax-advantaged basis. To learn more, take action and read the personal stories of FSA participants, please visit www.savemyflexplan.org.
WageWorks (NYSE: WAGE) is a leader in administering Consumer-Directed Benefits (CDBs), which empower employees to save money on taxes while also providing corporate tax advantages for employers. WageWorks is solely dedicated to administering CDBs, including pre-tax spending accounts, such as Health Savings Accounts (HSAs), health and dependent care Flexible Spending Accounts (FSAs), Health Reimbursement Arrangements (HRAs), as well as Commuter Benefit Services, including transit and parking programs, wellness programs, COBRA, and other employee benefits. WageWorks makes it easier to understand and take advantage of Consumer-Directed Benefits for 58,000 employers and approximately 4.5 million people. WageWorks is headquartered in San Mateo, California, with offices in major locations throughout the United States. For more information, visit www.wageworks.com.