Guidelines for the Use of FSA, HRA and HSA Funds to Purchase
Over-The-Counter Products After 1/1/2011
Dear Participant:
The recently enacted Patient Protection and Affordable Care Act of 2010 has changed the rules for the purchase of over the counter (OTC) products using your Flexible Spending Account (FSA), Health Reimbursement Arrangement (HRA), or Health Savings Account (HSA - we do not offer this service) pre-tax funds.
The IRS currently allows OTC medicine and drugs to be reimbursed using your FSA, HRA or HSA dollars. However, as of January 1, 2011:
1. FSA or HRA funds can no longer be used to purchase OTC medicine and drugs unless a medicine or drug is prescribed. A "prescription" means a written or electronic order for a medicine or drug that meets the legal requirements of a prescription in a state in which the medical expense is incurred and that is issued by an individual who is legally authorized to issue a prescription in that state.
The OTC items affected include items in the following categories:
The recently enacted Patient Protection and Affordable Care Act of 2010 has changed the rules for the purchase of over the counter (OTC) products using your Flexible Spending Account (FSA), Health Reimbursement Arrangement (HRA), or Health Savings Account (HSA - we do not offer this service) pre-tax funds.
The IRS currently allows OTC medicine and drugs to be reimbursed using your FSA, HRA or HSA dollars. However, as of January 1, 2011:
1. FSA or HRA funds can no longer be used to purchase OTC medicine and drugs unless a medicine or drug is prescribed. A "prescription" means a written or electronic order for a medicine or drug that meets the legal requirements of a prescription in a state in which the medical expense is incurred and that is issued by an individual who is legally authorized to issue a prescription in that state.
The OTC items affected include items in the following categories:
- Acid Controllers
- Allergy & Sinus
- Antibiotic Products
- Anti-Diarrheal
- Anti-Gas
- Anti-Itch & Insect Bite
- Antiparasitic Treatments
- Baby Rash Ointments / Creams
- Cold Sore Remedies
- Cough, Cold & Flu
- Digestive Aids
- Feminine Anti-Fungal / Itch
- Hemorrhoid Preps
- Laxatives
- Motion Sickness
- Pain Relief (Tylenol, Advil, Aleve, etc)
- Respiratory Treatments
- Sleep Aids & Sedatives
- Stomach Remedies
2. If you have a prescription for an OTC medicine or drug, you must pay out of pocket at point of sale and then submit a manual claim requesting reimbursement. You cannot use your Benefits Mastercard™ for this purchase.
3. You can continue to use your FSA or HRA funds to purchase OTC items that are not considered a medicine or drug (e.g. bandages, splints, contact lens solution, etc.) Please note that insulin remains an eligible expense with or without a prescription. Your Benefits Mastercard™ can continue to be used for these purchases. For a list of eligible expenses, click here.
4. Remember to consider these new OTC rules when estimating the dollar amount to put in your FSA account for the next plan year.
5. Please read our Frequently Asked Questions page for more information.
Useful Links
Frequently Asked Questions
Reimbursement Request Form
Questions and Answers on OTC Medicines and Drugs answered by the IRS
2011 Eligible Expenses
Reimbursement Request Form
Questions and Answers on OTC Medicines and Drugs answered by the IRS
2011 Eligible Expenses
Contact Us
Phone:
(503) 946-3298
Fax:
(888) 539-9565
Email:
[email protected]
Address:
412 Jefferson Parkway, Suite 202
Lake Oswego, OR 97035
(503) 946-3298
Fax:
(888) 539-9565
Email:
[email protected]
Address:
412 Jefferson Parkway, Suite 202
Lake Oswego, OR 97035
We appreciate the opportunity to serve as your Third Party Administrator and are committed to keeping you informed of any legislative changes that might affect the Cafeteria Plans. If you have any additional questions or are unclear how this new law will affect your plan, please do not hesitate to contact us.