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Return Of Buying OTC Drugs With Pre-Tax Accounts Slow To Dawn On Consumers After 10-Year Sunset

Return Of Buying OTC Drugs With Pre-Tax Accounts Slow To Dawn On Consumers After 10-Year Sunset

Source : 'HBW Insight'

A decade of lobbying on Capitol Hill succeeded in making OTC drugs again eligible for purchases using pre-tax health savings accounts but more time apparently is needed for the change to resonate with consumers.

The Consumer Healthcare Products Association is preparing a digital campaign to launch later in 2020 to explain that health savings, flexible spending and similar pre-tax accounts once again can be used for direct purchases of OTC drugs. The change Congress was approved in March as part of a broad legislative package on economic stimulus in response to the COVID-19 pandemic.

“I’ve been in touch with several [CHPA] members who are planning on including it in their marketing protocol,” said Taylor Holgate, the trade group’s government affairs director.

“I do know that they’re really eager to make sure that consumers know about this message and know about this new benefit,” Holgate told HBW Insight in a recent interview.

CHPA also is working on making consumers aware of the savings they realize through buying OTC drugs with financial service advisor Marsha Barnes, founder and CEO of the Finance Bar, which targets consumers’ budgeting and spending.

finance bar ceo marsha barnes: "Because of what a lot of consumers are facing right now ... hey may not be aware of how this health savings account benefit can serve them at this time."

“More than nine in 10 Americans are feeling anxious about their finances amid the COVID-19 pandemic and health care is known as one of the top stressors,” Barnes said.

Still, buying OTCs again with FSAs, HSAs and similar accounts hasn’t caught on widely with consumers, she adds.

The apparent lack of awareness could stem from consumer media typically not noting that in addition to economic stimulus programs, the Coronavirus Aid, Relief and Economic Security (CARES) Act eliminated a requirement that consumers have prescriptions to buy OTC drugs using the accounts. ("US Pandemic Relief Package Delivers OTC Industry Regulatory Wishes Supplement Business Hopes" "HBW Insight" )

The provision in the bill also added tampons and other women’s menstrual products for the first time as a category eligible for purchases using pre-tax accounts. ("Health And Wellness Industry News Restoring Access Bill Introduced Another Dietary Fiber Meets FDA" "HBW Insight" )

“This information has not made the mainstream media, so because of what a lot of consumers are facing right now, layoffs, furloughs, working online, they may not be aware of how this health savings account benefit can serve them at this time,” Barnes said.

“Many people are just simply not aware of it,” she added.

A second potential impediment to consumers resuming buying OTC drugs with pre-tax savings accounts is that the amounts dedicated to their accounts were set at the start of the year and cannot be increased. Some consumers may be aware of the change but are not using the accounts for OTCs because they didn’t factor spending on the products into their account levels.

chpa government relations director taylor holgate: "the policy change ... that required patients to go get a prescription order in order to use their HSA and to save money on an OTC was a little bit annoying to a lot of people."

“This was a mid-season change and people just might not know about it. It was part of the coronavirus package. It was included in the coronavirus package because it was thought that it was relevant to the coronavirus crisis and helping Americans right now, putting money in peoples’ pockets right now, making it easier for people to meet their healthcare needs right now. But we are outside of the benefit cycle,” Holgate said.

The end of using the accounts to pay for OTC drugs without a prescription didn’t go unnoticed, though.

“When you get to the bottom of it, this policy, the policy change in the Affordable Care Act that required patients to go get a prescription order in order to use their HSA and to save money on an OTC, was a little bit annoying to a lot of people,” she said.

The ACA, passed by Congress in 2010 and having effect in 2011, imposed the prescription requirement based on Congressional Budget Office findings that health-care cost savings linked to buying OTCs with pre-tax savings accounts were less than the amount of tax revenues the US Treasury was losing to the accounts. ("Restoring OTC Eligibility For Health Savings Could Fly During Lame Duck Session" "HBW Insight" )

The CBO calculation, Holgate said, failed to include additional health-care costs factors. Those include the $146bn in savings to the US economy that access to OTC drugs generates annually. ("Providing High Value OTC Drugs Deserve Higher Profile In Health Care CHPA" "HBW Insight" )

“Legislating is complicated and the budget process behind a massive piece of legislation like the ACA is also complicated. Then, the way CBO works … they really only capture, the way they do the math, with how it’s going to affect the government,” she said.

“When you look at the whole scope of every extra trip to the doctor, every consumer who has to make an extra phone call to their insurance company if they were confused that this benefit they used to have doesn’t work anymore. All of those costs in total, that’s a huge savings to the economy when we removed this barrier, so that folks can plan ahead and use the health care money that they’re planning ahead with on healthcare that folks needing care need,” Holgate added.

By Malcolm Spicer