Although most changes required by health-care reform will take place in 2014, new rules starting on Jan. 1, 2011, will restrict what can be purchased with flexible spending account dollars, increase the pool of individuals eligible for health care insurance and open the way for free preventive care. Consider this information.
* Flexible Spending Account money can be used for grown children. Many employers will allow you to pay out-of-pocket medical expenses for a grown child up to 27 years of age (even if the child is not claimed as parent's dependent) with your FSA funds. Ask your employer about specific FSA rules.
* Beginning in 2011, you can no longer use pretax money from your employer's FSA to pay for over-the-counter drugs. However, these medications still qualify for reimbursement from your FSA if you submit a prescription with your receipt. Ask your doctor to write a prescription for over-the-counter drugs frequently used by your family. Contact lens solution, hearing aid batteries and diabetes supplies are still eligible without a prescription.
* Carefully plan the timing of elective procedures. Some employers allow employees the opportunity to contribute a maximum of $5,000 to a Flexible Spending Account. In 2013, the ceiling will be $2,500.
If your employer allows a grace period to use or lose your pretax FSA, you may want to consider planning an expensive elective surgery sometime in the first three months of the year. Let's say you are planning laser eye surgery, and your employer allows a "use it or lose it" grace period ending on March 15.
If you plan your eye surgery in the first two-and-a-half months of 2012, you can use your available FSA savings from 2011 plus your full FSA allocation for 2012 to pay for your surgery. You can use this same tactic to combine leftover 2010 FSA funds with 2011 FSA dollars for medical expenses incurred by March 15, 2011. Check your employer's plan for details and rules.
* Take time for preventive care. If you or your family members enrolled in a new health plan on or after Sept. 23, 2010, the plan will be required to cover recommended preventive services without charging a co-pay, co-insurance or deductible. These services may include depression screening, diet counseling for adults at higher risk for chronic disease, alcohol misuse screening and counseling, and obesity screening and counseling for all adults.
Visit www.healthcare.gov for additional information on these and other health care rules.