Skip to main content

What the AHCA could mean for the OTC business

5/5/2017

WASHINGTON — One significant provision in the American Health Care Act allows for broader use of Health Savings Accounts and Flexible Savings Accounts to pay for OTC products, which in turn could create a greater demand for more affordable self-care solutions.



"First and foremost, we were able to get into motion a very important, consumer-friendly provision that [would reverse] taking OTCs out of the offering in HSAs and FSAs," Mike Tringale, senior director communications for the Consumer Healthcare Products Association, told Drug Store News. "[Restoring OTC eligibility] was a top priority."



And while there is not any guarantee the healthcare legislation will survive Senate review fully intact, restoring OTC eligibility under HSAs and FSAs is likely to be in any final bill. "[This legislation] was a reaffirmation that there are huge pressures on healthcare costs," noted Ed Rowland, principle of OTC consultant firm Rowland Global. "Self-diagnosis and  self-medication will continue to be goals which can and should gain bipartisan support," he said. "I would predict more support for returning OTCs to HSA eligibility."



In addition to making OTC purchases eligible under HSAs and FSAs, the AHCA would nearly double annual HSA contribution limits above current contribution limits and allow spouses age 55 or older to make catch-up contributions to the same HSA. Similarly, the legislation would remove the limit on the amount an employee may contribute to a health FSA, which stands at $2,600 for 2017.



There may also be a repeal of the "Cadillac tax" and other levies on employer plans, noted Jeremy Miller, CEO and founder FSAStore.com/HSAstore.com. The ACA imposed a 40% excise tax on the value of employer-sponsored health plans exceeding $10,200 for individuals and $27,500 for family coverage, he explained. "We've been actively trying to take HSA and FSA out of that threshold," Miller told Drug Store News. "We felt we were using an employee's tax-free dollars, so why should there be a tax on what employees put into their accounts?"



"We're bullish on what's going to happen with these accounts," Miller added. "We see them as the 401Ks of healthcare."



Since OTC eligibility under HSAs and FSAs was first lost in 2011 with the passing of the Affordable Care Act, CHPA has been working hard to communicate the value that OTC medicines represent to Americans.


According to a survey conducted by Harris Poll on behalf of CHPA, the majority of Americans (75%) favor including OTCs in FSAs and HSAs. "At a time when more and more Americans are exercising these vital HSA and FSA benefits, this is a common-sense fix for many families who rely on non-prescription OTC medicines to treat common ailments such as allergies, cough and colds, or pain," CHPA's president and CEO Scott Melville stated in March.



 


X
This ad will auto-close in 10 seconds