2011 Flexible Spending Account Changes to Consider for Open Enrollment

This time of year, most employers offer ‘open enrollment‘ (aka annual enrollment). It is a period of time where you can change your benefit elections.

And it is usually the only time during the year that you can do this outside of a ‘qualifying event’. A qualifying event is usually a major life change (i.e. newborn, marriage, death in family, etc.) where you can make a major change to your employee benefits.

In 2011, there are some unique changes to flexible spending accounts (FSA), HSA’s, and MSA’s.
2011 FSA Changes (also applies to HSA’s and MSA’s)

Suddenly, flexible spending accounts aren’t so flexible anymore. As part of the Affordable Care Act, you can no longer purchase over the counter items with FSA’s, HSA’s, and MSA’s. According to the IRS,

“Under the new standard, the cost of an over-the-counter 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 other health care expenses such as medical devices, eye glasses, contact lenses, co-pays and deductibles. 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 can still be reimbursed in 2011, if allowed by the employer’s plan.”

If you didn’t come close to hitting your FSA contribution in 2010 and used it to purchase a lot of over the counter drugs, you might want to lower your 2011 contribution as any funds you don’t spend by the date outlined in your plan are automatically forfeited.

For more information on this change, check out Affordable Care Act FSA Q & A.

And while you’re digging in to your flexible spending account, you should also complete the following open enrollment checklist:

Update health insurance: Many employers make changes to health insurance plan offerings, which can have an impact on your overall cost. You’ll want to review the changes to see which option makes the most sense for you.

Update beneficiaries: If you need update your beneficiaries for 401k, life insurance, disability insurance, or any other benefit your employer offers, this is the time to do it.

Voluntary life insurance/Disability insurance changes: Many employers offer additional coverage and sometimes at a rate that can’t be beat if you were to search on your own. If you’ve encountered a life change, it might be time to re-assess how much coverage you have elected or look into getting coverage for the first time.