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As Congress considers how to pay the hefty price tag for health care reform, one option under consideration is changing the structure of flexible spending accounts a tool used by millions of hardworking Americans to manage and pay for health care costs not covered by insurance on a tax-advantaged basis. Limiting the amount of money that can be contributed into FSAs, as some in Congress have suggested, will reduce the value of the benefit and force plan participants to pay higher taxes and health care costs at a time when many can least afford it an outcome inconsistent with the principles of health care reform.
Contrary to what some people suggest, FSAs are not a health care benefit for the rich. The average FSA participant earns about $55,000 annually and uses the benefit to carefully budget and pay for eligible out-of-pocket health care expenses such as routine co-pays, over-the-counter drugs, contact lenses and orthodontic care. Sadly, those who stand to lose the most with a change to FSAs are the individuals and families battling chronic conditions that require ongoing care and medical supplies.
Many with chronic conditions set aside the maximum amount allowed by their employer year after year because they have the greatest health care needs. For example, diabetics rely on FSAs to pay for testing strips, co-pays for the specialists they visit on a regular basis and maintenance medications. Asthmatics depend on FSAs to buy nebulizers and inhalers that are critical in preventing attacks. Parents of autistic children, who often face tens of thousands of dollars in annual treatment bills, use FSAs to pay for occupational and speech therapies not covered by their insurance.
In addition to the devastating effects that eliminating or capping FSAs would have on individual participants, a change to the structure of FSAs has the potential to increase total health care system costs the antithesis of health care reform goals. The threat is that many FSA participants, for financial reasons, would forego getting necessary preventative treatments, prescriptions and medical supplies. This would result in deterioration in overall health and increase hospitalizations.
In the House, the Ways and Means Committee approved health care reform legislation last month that includes a ban on using money set aside in FSAs to buy over-the-counter medications such as aspirin and allergy medications. While the Senate Finance Committee continues to develop its own health care reform legislation, there are reports that a cap may be included on the amount of money individuals can contribute to their FSAs annually. This follows a report issued earlier this year by the Joint Taxation Committee that projected repealing the tax exclusion for FSAs, health savings accounts and health reimbursement arrangements would save about $68.6 billion over 10 years.
At a time when Congress is trying to lower health care costs and provide quality, affordable care for all Americans, it should not do so at the expense of hardworking Americans who rely on FSAs to manage their health care costs. Moreover, a change to the structure of FSAs runs contrary to President Barack Obamas continually reaffirmed pledge to allow Americans who are happy with their health care coverage to keep it as is.
Obama and Congress should protect the millions of Americans who rely on FSAs from becoming the unintended victim of health care reform. FSAs are part of the solution, not part of the problem. This benefit should be embraced as a valuable budgeting tool. It encourages participants to take an active role in managing their health care and is a safety net for many Americans struggling to afford rising health care costs.
Jody Dietel is the spokeswoman for Save Flexible Spending Plans, a national grass-roots advocacy organization dedicated to preventing the elimination of flexible spending accounts in health care reform efforts.