Health Care Law Change To Flexible Spending Accounts Could Be A 'Huge Hassle'

WASHINGTON — A headache awaits people who use those tax-free health spending accounts to pay for over-the-counter allergy relievers, heartburn blockers and other drugstore remedies. Starting next year, you'll need a prescription for the drugs to qualify.

The change in so-called Flexible Spending Accounts is part of the new health care law, and doctors are bracing for patient confusion and annoyance as they decide how to handle prescription requests for products that people normally use on their own.

"A huge hassle," predicts Dr. Roland Goertz, president of the American Academy of Family Physicians.

Flexible spending accounts, or FSAs, are pretax dollars that workers can set aside through their employers to pay out-of-pocket health care costs. That includes insurance copays and deductibles, treatments that an insurance plan may not cover, eyeglasses, dental work and, yes, nonprescription medications.

But the new health care law says over-the-counter drugs qualify for reimbursement through FSAs starting Jan. 1 only if the patient has a doctor's prescription. The only exception is for insulin bought without a prescription. (The new rule applies to similar Health Savings Accounts, too.)

Another change comes in 2013, when the new law will set a $2,500 cap on how much can be set aside in an FSA. Many employers currently allow up to $5,000 to be put into the accounts – reflecting that they tend to be used for pricier expenses than OTC drugs. Today's average set-aside is about $1,500, says Rose Stanley of WorldatWork, a human resources association.

For now, what do savvy patients need to know in planning for over-the-counter purchases in next year's FSA?

_The estimated 35 million FSA users must spend all their set-aside money each year or lose it. People tend to use leftover dollars by stocking up on aspirin and other drugstore staples at year's end, and the prescription requirement may put a crimp in that spree next fall.

_According to the Internal Revenue Service, the prescription requirement is only for OTC medications, not other non-drug health supplies such as contact lens solutions, bandages, crutches and blood-sugar test kits. These will merely require a receipt for reimbursement, just like today.

_Next year the health care law also eliminates preventive service copays, such as for well-child visits, mammograms and vaccinations, possibly altering how much people put into an FSA in the first place.

_Most affected by the OTC rule will be daily users of those drugs – like people who treat arthritis with ibuprofen, or gastric reflux with Prilosec OTC, or hay fever with Claritin. They will have to calculate if any extra doctor visits offset the pretax savings.

The change shouldn't cost extra if your doctor knows you've been taking OTC medicines routinely and thus has no trouble writing a prescription by phone or at your next regularly scheduled visit, says Dr. Gary Rogg, an internist with Montefiore Medical Center in New York. In that case, the change wouldn't cost anything extra.

If you've never mentioned taking a particular OTC drug, the doctor may demand an office visit, with its copay, before pulling out the prescription pad.

"If a 20-year-old wants to buy Prevacid because of heartburn, odds are it's diet-related. If it's a 60-year-old, you really are obligated to do a 'workup'" in case the pain signals something worse, Rogg says.

People who use high doses of OTC drugs might find a prescription-only version a better deal depending on their insurance copay rules, he adds, even if that's costlier for the health care system overall.

Increasing communication about OTC drug usage would be a good side effect of the rule change, says Dr. Joshua Freeman, family medicine chairman at the University of Kansas Hospital.

"If you're taking something I think is bad for you, I'm glad I found out," he says.

But Goertz says it's not clear exactly what's required for an OTC prescription. If he writes one for a 30-day supply of ibuprofen with 11 refills but the arthritis patient buys once in bulk, will the FSA provider honor that reimbursement?

And there's an added wrinkle for the millions who use special FSA debit cards to pay for purchases straight from their account. IRS guidelines say those debit cards can't be used for over-the-counter drugs under the new change, and will have to be reimbursed by turning over a copy of their receipt and prescription to their FSA provider.

The National Association of Chain Drug Stores has asked the IRS to reconsider, predicting customer anger if the debit card works for one kind of purchase but not another.

Stay tuned: It's not clear if the IRS will alter its guidelines, which are open for public comment until Dec. 27.

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EDITOR's NOTE – Lauran Neergaard covers health and medical issues for The Associated Press in Washington.

___

Online:

IRS info: http://www.irs.gov/

Preventive care information: http://www.healthcare.gov/law/provisions/preventive/index.html

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Midterm election 2010: An Inside Look At the group off spending surge energize the image group

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WASHINGTON — A year ago, two top Republican strategists sat down for lunch at the venerable Mayflower Hotel, five blocks from the White House, calculating how to exploit the voter anger they had seen erupt at Democratic town hall meetings that summer.

Today, the money-raising success of the GOP-allied attack led by the U.S. Chamber of Commerce and the Karl Rove-inspired American Crossroads has stunned opponents and even its own architects. It's one big slice of the estimated $3.5 billion expected to be spent on this year's campaigning, a record for a midterm election.

Financed to a great degree by undisclosed donors – and helped by a new Supreme Court ruling – the deep-pocketed groups have become a dominant part of this election's narrative. They have reversed past pre-eminence by Democratic outside groups. And they have become a prototype for elections to come.

Their effort has been a major factor in the $264 million in spending so far in this election by outside groups – organizations separate from the political parties and candidates.

Rove, who was President George W. Bush's top political adviser, and the two Mayflower lunch partners – former GOP Chairman Ed Gillespie and Steven Law, a veteran of Capitol Hill and the Chamber of Commerce – worried that the Republican Party alone would be no match for President Barack Obama's superb fundraising.

"Clearly there was a tremendous amount of grass-roots energy building – a grass-roots prairie fire that was building in intensity," Law, now the Crossroads president, said in an interview. "We felt that one of the things we could do was pour gasoline on that."

If voters seemed angry, so was corporate America. Obama led Congress into passing health care and financial regulation overhauls and pushed for climate legislation, all of which angered the business community.

In the end, the advantage held by the GOP outside groups helped neutralize the financial edge enjoyed by the Democratic Party over the Republican Party. Together, they all have contributed to an explosion of concentrated political advertising – perhaps $1 billion worth – that rivals the annual ad spending on cereal by Kellogg's or on drugs by Viagra maker Pfizer Inc.

In the past few days, Democratic-leaning groups led by labor have begun to weigh in with their own money, anxious to match the GOP effort on the ground and on the air. Aided by more than $4 million from America's Families First Action Fund, a group gathering large donations to support House candidates, Democratic allies have managed to stay virtually even with Republican groups during the past six days, according to an Associated Press analysis of Federal Election Commission data.

The GOP plan Rove, Gillespie and Law designed was ambitious. It would require the various Republican constituencies to unite behind one economic message. The conservative movement's biggest donors would have to pony up for a midterm election with sums that would have to match or exceed their giving during presidential elections. And the groups would have to align their spending, selecting their targets and becoming almost a parallel Republican Party.

This election has emphasized the use of nonprofit, tax-exempt organizations in politics – a trend that is not new but has gained attention by the sheer size of the spending. The groups are not required to disclose their donors, adding an element of secrecy that Obama and Democrats have denounced.

The $264 million in outside group spending reported to the Federal Election Commission as of Tuesday already exceeds outside spending in the 2008 presidential year and is four times the outside spending seen for the 2006 midterms.

"It's a telltale sign that things have really shifted in a dramatic way this cycle," said Sheila Krumholz, executive director of the Center for Responsive Politics, which tracks campaign money.

Moreover, actual spending could be far higher because the reports cover only spending on communications. There is no accounting for get-out-the vote field operations by conservative and liberal groups.

The money comes amid a new landscape in campaign finance created when the Supreme Court, in a case known as Citizens United v. Federal Election Commission earlier this year, opened the way for corporations and unions to spend money in elections. While that ruling and other court decisions have created a more freewheeling environment, the lack of disclosure makes it difficult to determine whether corporations have stepped up their giving.

What's more, the special Massachusetts Senate election this year, won by Republican Scott Brown, preceded the Citizens United decision and still attracted more than $5 million in spending by more than a dozen outside groups.

The U.S. Chamber of Commerce relies on undisclosed corporate contributions and has seen its fundraising grow. Chamber President Thomas Donohue has aimed for a record goal of $75 million in political spending at the federal and state levels this election season.

Bruce Josten, top lobbyist for the U.S. Chamber, said the business group saw Democratic-allied groups in 2008 pour vast sums of money into TV advertisements and achieve historic successes and decided to "take a page out of their book, learn a lesson."

"We've been able to do what we've done because people are angry," Josten said.

Money alone does not decide political contests. In 1994, the Democratic fundraising advantage could not stop a Republican tidal wave that switched control of Congress.

But it is one significant barometer of partisan fervor.

"Money does follow momentum," Josten said. "You saw that in '08, and you're seeing it now."

Republican-leaning groups have far outpaced liberal and Democratic-leaning organizations. American Crossroads and its affiliate, Crossroads Grassroots Policy Strategies, surpassed their $65 million fundraising goal on Monday and together have spent $30 million on 14 Senate and 18 House races. The Chamber of Commerce has spent $34 million in 58 races. The American Action Network, which occupies the same 12th floor office space in a Washington office building with American Crossroads, has spent $22.7 million.

With days to go, Democratic-allied groups are weighing in, too. They are relying primarily on labor unions that are spending directly in some battleground races or financing smaller versions of the GOP-allied model.

The National Education Association, through its advocacy fund, has pumped $2.4 million into four Senate races just in the past three days, including $1 million for ads opposing Republican Senate candidate Dino Rossi in Washington state. But labor's effort is diffuse. One of the biggest union spenders – the American Federation of State, County and Municipal Employees – has spent $90 million so far in this election, according to the union's political director, Larry Scanlon. But that money includes millions that it is spending on gubernatorial and state legislative races. Its direct spending on congressional contests as of Tuesday totaled $11.8 million.

Unions also are less likely to use television advertising to deliver their message, focusing instead on mailings and door-to-door canvassing.

In addition, the millionaire contributors that helped finance Democratic outside groups in the past have largely stayed away from politics this election, and the unions, their ranks diminished by the recession, have less money to spend. Donors like billionaire George Soros have put their money into policy causes such as health care and climate change. Last week, Soros gave $1 million to the liberal Media Matters for America, a group that routinely targets Fox News. On Tuesday, he contributed $1 million in support of a California referendum to legalize the recreational use of marijuana.

Big corporate and labor money is not unusual in politics. Unions and companies used to give directly to the parties in unlimited amounts. That money was disclosed and had restricted uses. But Congress in 2002, banned such "soft money" contributions to the parties.

It didn't mean the source of the money went away from politics.

___

Associated Press writer Julie Hirschfeld Davis contributed to this report.

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