Flexible spending accounts let employees spend pre-tax dollars on out-of-pocket medical expenses: co-pays, eyeglasses, and other items not directly covered by health insurance. Beginning in 2003, plan participants could also spend FSA dollars on over-the-counter medications.
In January 2011, however, FSA rules began to shift, with prescriptions now required for over-the-counter medications bought with money from an FSA. The change, coupled with more to come in 2013 and 2018, will substantially rearrange the landscape of FSA plans for employers, plan participants, and third-party administrators.
These benefits administrators worry that the new rules will make FSAs less attractive to employees — and to employers as well.
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