IRS’ updated FSA rules regarding OTC medicines draw response
WASHINGTON The Internal Revenue Service earlier this month issued guidance reflecting statutory changes regarding the use of certain tax-favored arrangements, such as flexible spending arrangements, to pay for over-the-counter medicines and drugs.
The Affordable Care Act, enacted in March, established a new uniform standard that, effective Jan. 1, 2011, applies to FSAs and health reimbursement arrangements. Under the new standard, the cost of an OTC medicine or drug cannot be reimbursed from the account unless a prescription is obtained. The change does not affect insulin, even if purchased without a prescription, or such other healthcare expenses as medical devices, eye glasses, contact lenses, co-pays and deductibles, the agency stated. The new standard applies only to purchases made on or after Jan. 1, 2011, so claims for medicines or drugs purchased without a prescription in 2010 still can be reimbursed in 2011 if allowed by the employer’s plan.
WageWorks, a provider of consumer-directed benefits solutions, including FSAs, this past summer advocated an extension of that Jan. 1 deadline, arguing that all parties — consumers, retailers and third-party administrators — needed additional time to react to the changes. “This restriction will hurt millions of consumers who rely on their FSAs to manage their out-of-pocket healthcare costs and pay for necessary over-the-counter therapies,” stated Joe Jackson, CEO of WageWorks. “If Congress is intent on putting this provision into effect, they should at least push back the deadline so that consumers — and especially retailers — are ready for the transition.”
Jody Dietel, president and chair of the Special Interest Group for Inventory Information Approval System Standard said, “Without clarification on the type of permission needed for FSA reimbursement for OTC drugs, consumers, retailers and third-party administrators will be confused and unlikely to fully comply with the new regulations by the start of new year. Meanwhile, we’re likely to see doctor’s offices overwhelmed with patients seeking prescriptions to use their spending accounts for Claritin, Zyrtec and other OTC items,” she said. “A delay in implementation will provide time for all parties to be better educated on the issue and prepared to comply with the new rules.”
SGIS maintains an electronic list of FSA-eligible products used by most retailers in the country.
The new regulations, even the recent guidance issued by the IRS, leave many questions unanswered, according to a report on The Bulletin published last week. Will physician prescriptions be required to specify a number of pills with the prescription, or can consumers buy bulk-sized containers of pain relievers? And if pharmacies must process prescriptions for aspirin or cold medication, will they seek some dispensing fee for their time?
“We’re concerned that there will be a lot of confusion out there,” Jeff Beadle, CEO of SIGIS, told The Bulletin. “Someone is buying Tylenol in December, and they can’t now buy Tylenol in January unless they go to their doctor and get a prescription first.”
The report suggested retailers will face an additional challenge — when to update the list of eligible products under FSA plans because many FSA plans do not run on a calendar year.
Wellness gaining traction among young, aging
BELLEVUE, Wash. —Trans fat, salt and sugar—out. Products with a less-guilt-because-this-might-actually-be-good-for-you message—in.
At least that’s been the trend that has continued to gain significant traction across the marketplace over the past 10 years, according to a recent Hartman Group report titled “Reimagining Health and Wellness 2010” that was released last month.
Since 2005, spending on wellness products has grown significantly, with a higher proportion spent on wellness for fresh food categories. The average household spends $148.48 per month (or 19% of all monthly spending) on categories that have a wellness halo, The Hartman Group suggested.
But according to the report, the definition of wellness currently is undergoing a transformation, especially as more than half of all consumers (54%) reported they recently had changed their views on health and wellness, with younger consumers being more likely to have made changes in the past year, the report noted.
Younger consumers, for example, cited stress (51%) and energy levels (47%) as triggers for changing their views on health and wellness. For older demographics, it was the aging process that had them actively in search of wellness solutions. Graying baby boomers, for example, were more frequently shunning consumer packaged goods high in cholesterol, saturated fats, trans fats or salt in favor of more “fresh” fare out of concern for their heart health.
“Increased spending on products beneath a wellness umbrella, particularly in fresh categories, reflects what we have been witnessing for more than a decade now,” stated Laurie Demeritt, The Hartman Group president and COO. “Consumer understanding of wellness has moved away from traditional notions of condition treatment and disease prevention, and toward attaining a better quality of life. They are looking for products and services that help them meet their wellness goals and aspirations,” she said.
And they are not necessarily looking for those products and services at smaller, specialty health food stores, or even Whole Foods, anymore. Mass-oriented retailers have been buttressing their product mixes with healthier-for-you choices, and according to The Hartman Group survey, consumers are taking notice. “Consumers talk about the rising relevance of supercenters, [for example], because they are increasing their selection of ‘natural’ brands and products,” the report read.
Considered a complementary “tool” to optimum health and wellness, use of dietary supplements also is on the rise. This is especially the case with vitamin D—60% of surveyed adults have been actively looking to increase the amount of vitamin D in their diets.
Average monthly household wellness spending by category
|Meat, poultry, seafood||$20.22||$18.25||$18.31|
|Fruits and vegetables||16.81||12.67||14.79|
|Drugs and supplements||11.08||10.95||9.77|
|Cereals and bakery||10.73||8.46||9.08|
|TOTAL AVG SPENDING||$148.48||$115.98||$104.28|
Your very own pharmacist just a click (and consult) away
Consumers are working more, playing more, shopping more and learning more online than ever before. So the click-and-consult services that Rite Aid has made available to its wellness+ members not only represent today’s cutting edge, but also offer a peek into how consumers may interact with their healthcare teams tomorrow.
“Patients take a great deal of interest in being able to have a conversation with their pharmacist,” said Robert Thompson, Rite Aid EVP pharmacy. “The online chat is just another vehicle by which a patient might be able to have a discussion with a Rite Aid pharmacist,” he said. And that’s important, Thompson added, because each means of communication holds relevance for different groups of the population. And whether a patient prefers one-on-one consultations, round-the-clock telephone access—an 800 number for wellness+ members to consult a Rite Aid pharmacist has been up and running since that program’s inception in April—or this new online portal, Rite Aid has made itself available to its patients no matter a patient’s personal consultation preference. “For us, it’s all about providing a service that will enhance the ability of patients to communicate with a pharmacist,” Thompson added.
As for the service, wellness+ members can avail themselves of a pharmacist consultation at any time, day or night, either online or in select stores. “The pharmacists that staff our clinical call center are all PharmDs,” Thompson noted. “And many of them have received additional forms of clinical training. Our clinical call center does a variety of clinical programs—including supporting chat—that are really focused on compliance initiatives. They also provide clinical support for our own pharmacists internally.”
Rite Aid’s team of clinical pharmacists will be available to counsel patients on such issues as potential drug-drug interactions between their prescription therapies and their nonprescription remedies, or what foods and drinks may interfere with the effectiveness of their therapies. The clinical pharmacists also will be prepared to counsel on general health questions, such as how to control high blood pressure or lower cholesterol; how to tell the difference between a cold and the flu; ways to help manage diabetes; how to deal with insomnia; and questions about vaccinations.