Although the restriction on FSA or HRA reimbursement of over-the-counter (OTC) drugs and medications went into effect on January 1, 2011, you have until June 30, 2011 to amend your plan document to reflect this change, so if you haven’t yet done so, now is the time. The federal health care reform law known as the Affordable Care Act (ACA) prohibits health flexible spending arrangements (FSAs) and health reimbursement arrangements (HRAs) from reimbursing expenses for over-the-counter (OTC) medications and drugs obtained without a prescription (IRS Notice 2010-59), as of January 1, 2011. IRS guidance clarifies that expenses incurred for medicines or drugs now may be reimbursed by an employer’s FSA or HRA only if: 1) the medicine or drug requires a prescription; or 2) the medicine or drug is available without a prescription but the individual obtains a prescription for it; or 3) the drug is insulin.
Tips: A "prescription" means a written or electronic order for a medicine or drug that meets the legal requirements of the state in which the medical expense is incurred, and that is issued by an individual who has prescription authority in that state. When a participant submits a claim for an OTC medicine or drug for which they obtained a prescription, he or she must provide the plan administrator with a copy of the prescription in order for the expense to be reimbursable. Other OTC items that are not medicines or drugs, such as crutches, bandages and diagnostic devices, are unaffected by the ACA and remain reimbursable according to the terms of the employer’s plan. If Vigilant administers your FSA, your plan is already written to conform to this requirement and need not be amended.
This website presents general information in nontechnical language. This information is not legal advice. Before applying this information to a specific management decision, consult Vigilant or legal counsel.