Do you have a guess when menstrual products were first categorized as allowable expenses for health flexible spending accounts (FSAs) and health savings accounts (HSAs)? Although FSAs were first introduced in the Revenue Act of 1978, and the forerunner to HSAs became part of the Health Insurance Portability and Accountability Act (HIPAA) in 1996, menstrual products were not an allowable medical expense until the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) in 2020! This mind-boggling oversight is one of the many ways that FSA and HSA plans have failed to adequately meet the needs of Americans. Although this issue has been resolved, many remain.
One of the biggest ways that FSA and HSA plans fail Americans now is by not keeping up with the pace of innovation. For example, even though an FSA account holder can buy separate devices to measure their pulse oximetry, heart rate, and temperature, they are not allowed to purchase a device that will perform all three of these functions. Allowing the purchase of such a multi-function device would save hassle for the consumer as well as money for the government through reductions in emergency healthcare spending. The rules also permit in some cases for an account holder to use their funds to purchase a less-effective legacy version of a technology, but do not include the newer, more effective version. This is true for catastrophic fall devices, where legacy technology is bulky and requires a user to be physically and cognitively able to interact with a device—but new technology automatically detects falls and can connect to emergency services even without the user pressing a button.
The lack of coverage for cutting edge technology like wearable health devices can also lead to missed signs of illness. The National Basketball Association (NBA) strongly encouraged players to wear Oura rings—a wearable health device that tracks a variety of health metrics—to aid its early detection strategy for COVID-19 in 2020. This wearable health tech was a key to the resumption of their season, allowing for early detection of possible COVID infection and for team doctors to take additional steps. New wearables can also detect early signs of atrial fibrillation, helping catch this serious condition sooner and get patients better treatment.
Not covering these types of health devices now does not just cost us today but will cost us in the future as well. Long-term data is key to understanding health trends and informing preventive health measures. It will help doctors track their patients over time, allowing for better use of preventive measures before problems become acute. Wearable health technology is the best way to get this data, as it is easy for patients to use. The current system, which requires a doctor’s letter of medical necessity before a patient can use HSA or FSA funds to cover the cost of a device, does not allow for the kind of long-term tracking that will truly revolutionize medicine.
We need changes to the FSA and HSA system that modernize it and take advantage of new health technologies. The IRS has lagged behind in supporting health tech innovation, and Congress should act to ensure that patients can take full control of their health. Requiring that HSA and FSA accounts allow expenditures on wearable health technology would be a big step in the right direction.