Beginning Jan. 1, 2011, Flexible Spending Arrangements or health reimbursement arrangements cannot be used to gain reimbursement for the cost of over-the-counter medicine or drugs unless a prescription is obtained. The IRS is offering
frequently asked questions about the change on its website.
The change is contained in the Patient Protection and Affordable Care Act and does not affect insulin, even if purchased without a prescription, or other health care expenses such as medical devices, eye glasses, contact lenses, co-pays and deductibles.
The new standard applies only to purchases made on or after Jan. 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 Jan. 1, 2011 for Health Savings Accounts, and Archer Medical Savings Accounts.
For details on current rules, see
Publication 969. Updates on this change and other health care reform provisions can be found on the
Affordable Care Act page on IRS.gov, as well as in
Notice 2010-59 and
Revenue Ruling 2010-23.