FSAs’ “use-or-lose” rule ensures timely care

FSAs’ 'use-or-lose' rule ensures timely care

Timely eye care is crucial in overall vision health and wellness, which is why AOA continues to stand behind provisions in flexible spending accounts (FSAs) that help facilitate patients seeing their eye doctor on a regular basis.

"Procrastination of essential care defeats the very purpose of the FSA."

The end-of-year rush is underway for health-related goods and services as consumers look to the balance of their FSAs and see a surplus. Reportedly, 62 percent of companies with 50 to 499 employees and 85 percent with 500 to 4,999 offer access to FSAs, and now is crunch time for those account holders.

The tax-favored health program—around for nearly three decades—allows people to sock away up to $2,550 yearly (for individuals) to pay out-of-pocket expenses or other health care costs, such as glasses or contact lenses. However, FSAs are designed to be used only within the plan year, otherwise that money is subject to forfeiture in many cases.

AOA fights to keep focus on patients in FSA language
This "use-or-lose" provision came under scrutiny by the Treasury Department and Internal Revenue Service (IRS) in 2012-13 when the agencies hinted that they might do away with it. After hearing from the AOA, the agencies ultimately announced alterations to the longstanding provision, allowing consumers to roll over a maximum of $500 in FSA funds for the following year.

The AOA viewed this as a positive development after fighting hard to convince policymakers that completely scrapping the "use-or-lose" rule could be detrimental to the nation's health and keeping the mechanism intact was necessary because it plays an import role as an incentive for Americans to seek routine eye care.

In comments to the IRS before the announced alterations, the AOA stressed that "elimination of the 'use-or-lose' rule will undoubtedly lead to less primary and preventive eye and vision care, and, in turn, higher costs for employers and employees due to missed opportunities for early diagnosis and treatment of a range of conditions..."

The rollover solution that was settled upon strikes a balance between consumer flexibility and the goal of encouraging them to seek routine care via these FSA funds. Steven A. Loomis, O.D., AOA president, sees FSAs as a tremendous benefit to patients, and the "use-or-lose" provision as helpful.

"FSAs tend to be utilized for care that may not be fully covered by the patient's regular health insurance, thus extending the range of medical services they can access," Dr. Loomis says. "Aside from the obvious tax benefits, patients are incentivized to use the account for needed care in a timely fashion. Without that incentive, patients tend to procrastinate essential care, defeating the very purpose of the FSA."

Click here to read more about how doctors handle the year-end bustle from FSAs.

November 16, 2015

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