FSAs & OTC Drugs: Why Your Doctor Won’t Have Time to See You in December

by JT McGee

FSA chances mean flood of prescription requestsA massive change resulting from the passage of the 2010 Health Care Reform Act is sure to cause quite the waiting line at your primary care physician. The change? Flexible spending accounts used by 20% of the American adult population can no longer make reimbursements for over-the-counter medication expenditures. Oh no.

Most people know this game all too well. For several years running I remember my mom stocking up on all kinds of OTCs at the end of the year just so part of the $5,000 she contributes each year to an FSA wouldn’t be kept by the administrating company. This year, though, things will be a little different. This year she’ll need a prescription to do the same year-end drug run.

While we don’t expect to see much left over at the end of the year, if we do have any leftover cash we’ll have to go to the doctor so he can write us a prescription so we can buy what we need. But does it make sense? Yes, economically, it would make sense for us to burden our physician in order to spend the remaining FSA money.

My Own Example

I’ve my PPO card on hand, so this will be fairly simple. I’ve already hit my deductible this year, so by the time November/December roll around, that won’t be much of a deterrent. Also, thanks to generally decent health insurance terms, my PPO pays 80% of all costs at my general practitioner. Since he bills something like $120 just to talk to him, after discount, and then PPO payment, I usually have to pay something like $18 out of pocket.

So, at the end of the year, I’m sure me or my mom, dad, and brother will be making a visit for a load of prescriptions for over-the-counter drugs. Man that sounds weird to say. (Edit: There is some good news; prescription drug prices are now in freefall until 2015.)

Since it will cost me only $18 out of pocket to get the prescriptions, and probably 45 minutes in total wait and travel time (which I will value at $30), it makes sense for me to go to the general practitioner for prescriptions for aspirin, acetaminophen, ibuprofen, maybe even daily vitamins, provided the drugs are worth more than $48.
Makes sense for me to screw my PPO to protect my FSA money.

But wait….

You see, I’m heavily subsidized by my PPO. It only costs me only $48 to visit the doctor ($18 co-pay plus value of my time), but it will cost my PPO provider just under $100 to step in the door. Obviously there is a very big conflict of interests here. I would be willing to visit the doctor for prescriptions for drugs worth >$48, but my PPO will be paying some $100 for me to spend >$48 of my own money.

Doctors are soon to make out like bandits just because they have a legalized monopoly on the market segment that wants to use their FSA savings to buy over-the-counter drugs. And what about health insurance companies? They’re about to see massive spending by virtually everyone with an HSA/FSA at the end of the year.

Good luck getting into the doctor in November or December. And enjoy higher premiums on January 1, 2012. Economists forecast total increases in health care costs of $700 million per year resulting from a wave of people going to the doctor just for access to the prescription pad. All told, the group also expects a $3.3 billion shift from the front of the store to the pharmacy counter, since Doctors and patients will look to purchase basic medicines behind the counter with insurance, rather than off the shelf with FSA cash.

This system is stupid, it’s going to be costly, and doctors are going to booked up to the max when people realize that all these OTC drugs they’ve used as a year-end FSA ATM need a doctor’s prescription.

Stupidity, maybe not as bad as the breastfeeding tax break, but still pretty stupid. It’s DC, so I’ve come to expect it.

{ 2 comments… read them below or add one }

Bogey March 9, 2011 at 19:07

I must be way behind the info curve on the whole health care deal. I haven’t even seen a doctor in at least 5 years.

All I hear from people around here is that all doctor’s offices and and hospitals are clogged with illegals, who they are legally not allowed to turn away.

Perhaps I should confirm this rumor with my assistant – she goes to the doctor at least once a week lately, it seems.

Right now I am thankful for my health, and thankful I can largely avoid this industry (except for loaning it money).


JT McGee March 9, 2011 at 21:41

@Bogey – the health care industry is a joke. I have to interface with it a lot, mostly because the government doesn’t think me to be capable of using prescriptions unless I speak to a GP every three months about it. Pretty stupid. Protect the addicts at the cost of the responsible…that’s always been what government does best.


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