The Internal Revenue Service has released guidance on this provision of the Patient Protection and Affordable Care Act (PPACA) affecting consumer and employer benefits.
IRS Guidance on 2011 Changes to OTC Drug Reimbursements for FSAs, HSAs and HRAs
On September 3, the Internal Revenue Service issued Notice 2010-59 and Revenue Ruling 2010-23, which provide guidance reflecting the PPACA’s statutory changes effective January 1, 2011 with respect to medicine and drug reimbursements under FSAs, HSAs and HRAs. Under the new standard, the cost of an over-the-counter medicine or drug cannot be reimbursed from the account unless a prescription is obtained. The change does not affect insulin, even if purchased without a prescription, or other health care expenses such as medical devices, eyeglasses, contact lenses, co-pays and deductibles. The new standard applies only to purchases made on or after January 1, 2011, so claims for medicines or drugs purchased without a prescription in 2010 can still be reimbursed in 2011, if allowed by the employer’s plan.
A similar rule goes into effect on January 1 for Health Savings Accounts (HSAs), and Archer Medical Savings Accounts (Archer MSAs).
Click HERE to view the Affordable Care Act: Questions and Answers on Over-the-Counter Medicines and Drugs section of the IRS' website.