NCPA - National Center for Policy Analysis

Flexible Spending Accounts Get Hit by New Law

February 4, 2011

New restrictions on flexible spending accounts (FSA) are among many provisions of the health law targeted by Republicans for change or repeal, says Politico.

  • An estimated 30 million Americans use pretax money deposited into employer-sponsored flexible spending accounts to purchase health care.
  • Starting last month, the law bars these individuals from using FSAs to buy over-the-counter products like cold remedies unless they get prescriptions.
  • A New Jersey nonprofit has done an economic analysis that shows that the over-the-counter restrictions will lead to $695 million annually in extra health care spending.
  • The major reason: Since the law allows such purchases if patients get a prescription, some consumers will go to their doctors more often, and those physicians may end up prescribing more expensive drugs.

Source: Jordan Rau, "Defending the Flex Spending Accounts," Politico, February 2, 2010.

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