By GMDC
Are retailers of over-the-counter (OTC) health and beauty care (HBC) products taking full advantage of spending from Flexible Spending Accounts (FSAs)?
In late 2003, eligibility for flex spending reimbursement was expanded to include many of the OTC medicines consumers rely on for their healthcare needs.
Many other retailers, especially eyeglass retailers, actively promote the usage of FSAs. This is highlighted in the last quarter of the year because FSAs are a "use it or lose it" account. Money set aside in an FSA must be utilized in the calendar year.
As health care costs continue to rise, FSAs are becoming a more common work-related benefit offered to help employees finance more out-of-pocket expenditures. The Kaiser Family Foundation, Employee Health Benefit Annual Survey, showed that 83 percent of firms with over 5,000 employees now offer employees FSAs as a benefit.
Flexible Spending Accounts and Health Savings Accounts (HSAs) work by allowing consumers to put aside pre-tax dollars in order to pay for health-related items throughout the year that are not covered by health insurance. This includes deductibles, co-pays and out of pocket expenses.
Savings can depend on several factors, including a consumer's income and tax bracket. For example, a consumer with an annual income of $40,000 in the 15 percent tax bracket with estimated health care expenses of $2,000 would save approximately $453 annually by paying for their healthcare costs with pre-tax FSA dollars rather than post-tax ones.
There are many OTC HBC categories that are now covered by FSAs. These include allergy medicines, analgesics, antacids, antibiotic creams, family planning and birth control, first aid, home diagnostic kits, incontinence products, joint-support bandages, smoking-cessation relief, vaporizers and humidifiers and more. Items not covered would be cosmetics and shampoo, but treatments related to psoriasis and lice are covered. Vitamins and homeopathic medicines are only covered if prescribed by a health care professional, especially an item like calcium. Sunscreen with 30 or higher SPF is also covered.
If you consider a consumer who is taking a regular allergy medicine, or trying to stop smoking by using smoking-cessation products, the savings to the patient are immense.
But are consumers aware of the tremendous savings FSAs can bring them? With more employers offering this valuable program, the number of consumers enrolling in FSAs is increasing. HBC retailers need to take advantage of this opportunity.
Discussion Questions: Are retailers doing enough to educate and promote to consumers the benefits of FSAs with their health and beauty care spending? Can retailers do more, especially at the end of the year, to capture unused FSA spending? Are suppliers of FSA covered health and beauty products doing enough to educate and promote to consumers the benefits of FSAs?