Bill seeks to eliminate ‘use it or lose it’ provision in FSAs
WASHINGTON — Sens. Ben Cardin, D-Md., and Mike Enzi, R-Wyo., last week introduced the Medical Flexible Spending Account Improvement Act (S. 1404), a bill that would allow consumers to pay taxes on and withdraw any remaining funds in their employer-sponsored flexible spending accounts.
Current rules require that any leftover balance in an FSA must be forfeited to the employer at the end of the plan year, oftentimes identified as the "use it or lose it" provision.
The bill is the Senate counterpart to H.R. 1004, which was introduced with bipartisan support in March by Reps. Charles Boustany, R-La., and John Larson, D-Conn.
“It is time to modernize FSAs to eliminate this burdensome ‘use it or lose it’ rule," Cardin said. "It is both fair and sound health policy to allow FSA participants to cash-out remaining funds at the end of the plan year rather than forfeiting the balance to their employer.”
Save Flexible Spending Plans, an advocacy group that hopes to make FSAs more accessible to consumers, commended Sens. Cardin and Enzi for their introduction of the bill.
“FSAs help millions of Americans manage and reduce their out-of-pocket healthcare costs,” said Joe Jackson, chairman of Save Flexible Spending Plans and CEO of benefits administration service provider WageWorks. “However, the ‘use it or lose it’ rule creates an unnecessary risk for FSA participants and a deterrent for nonparticipants. Changing this rule will ensure that participants don’t lose their hard-earned money if their out-of-pocket healthcare costs don’t match their prediction for the year.”
In addition, the bill’s sponsors noted that the original reason for adopting the “use it or lose it” provision is no longer relevant. The IRS adopted the provision to prevent FSAs from being misused as tax shelters. But according to Sen. Cardin, “with the enactment of the Patient Protection and Affordable Care Act in 2010, annual contributions to FSAs will be capped at $2,500 beginning in 2013, which makes the ‘use it or lose it’ rule unnecessary.”
As healthcare consumers and American stakeholders affected by 16%+ GDP healthcare expenses dramatically draining our country’s economic strength, we should all drive support of the bill for the FSA Improvement Act. The Act removes significant disincentives to the adoption of money-saving tools by allowing participants to withdraw non-used funds at the end of each year. The FSA Improvement Act is at the core of consumer driven health care (CDHC). CDHC intuitively helps control costs as patients become true stakeholders and are fiscally, emotionally, and physically engaged in the choices, decisions and outcomes. On the objective side, a McKinsey study found that CDHC patients were twice as likely as patients in traditional plans to ask about cost and three times as likely to choose a less expensive treatment option. Further, it reported that chronic patients were 20 percent more likely to follow treatment regimes carefully. Now this is progress! Thankfully, CDHC is alive and present and, in order to reduce costs and improve overall ROI on health care, we need to strongly encourage any programs, including legislative, which promote, incent, and reward CDHC.
Study finds most smokers lack knowledge on ways to quit smoking
PARSIPPANY, N.J. — Almost half of all smokers try and fail to quit their addiction to nicotine products each year, according to a study released Wednesday.
A contributing factor to the high rate of failed quit attempts is the low use of nicotine-replacement therapies, the study found. That may be because of misperceptions around the health effects of NRTs.
The study, which was fielded in partnership by GlaxoSmithKline Consumer Healthcare and Legacy, reported that 93% of smokers did not know smoking while wearing the nicotine patch does not cause heart attacks; 76% of smokers did not know nicotine patch, gum and lozenge products are not as addictive as cigarettes; and 69% of smokers did not know NRT products are not as harmful as cigarettes.
"The data indicate a need to further inform smokers about the methods that can effectively help them quit," stated Saul Shiffman, researcher on the study, professor in the departments of psychology and pharmaceutical science at the University of Pittsburgh and senior scientific adviser at Pinney Associates, which provides consulting services to GSK. "Of particular note, 84% of respondents requested feedback on their incorrect answers in the survey, suggesting smokers want information regarding quitting and are interested in learning about the safety and efficacy of cessation strategies."
Findings from the study were published in a recent issue of the journal Addictive Behaviors.
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GSK expects to divest noncore OTC brands by late 2011, company says
PHILADELPHIA — GlaxoSmithKline expects to close the deal on the divestiture of several over-the-counter brands that were identified in April, the company stated Tuesday as part of its second-quarter earnings results.
"The divestment of noncore OTC assets in the [United States] and Europe will further aid our strategy to accelerate growth and increase the focus of our Consumer Healthcare business," GSK stated. "We are making progress to divest these products by late 2011, subject to realizing appropriate value for shareholders."
The update drove speculation as to who is in the running for GSK’s second-tier brands, which includes, in the U.S. market, analgesic powders BC and Goody’s, and the only OTC weight-loss product, Alli. According to a Reuters report published Thursday morning, private equity firms Advent, Cinven and Warburg Pincus are among the most likely bidders. Rival consumer healthcare divisions are not necessarily in the running, Reuters reported. Advent is considered the front-runner because it counts former GSK CEO Jean-Pierre Garnier among its group of operating partners. Nonbinding bids are due Aug. 8.
The total divestiture, which includes several European OTC brands, is expected to generate less than $2.1 billion, according to the report, given the uncertainty surrounding Alli — sales in the trendy weight-loss category continue to decline. For the 52 weeks ended April 17, (Alli was identified as a divestiture candidate April 14), Alli sales totaled $60.3 million across food, drug and mass (excluding Walmart), representing a decline of 35.4%.
The full report is available here.
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