The IRS issued guidance on statutory changes concerning the use of certain tax-favored arrangements, such as flexible spending arrangements (FSAs), to pay for over-the-counter medicines and drugs.For a Limited Time receive a
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Get Your Report Now!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, eye glasses, contact lenses, co-pays and deductibles.
The 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 (HSAs), and Archer Medical Savings Accounts (Archer MSAs).
For details on current rules, see Publication 969.
To read more about these changes, Notice 2010-59 and Revenue Ruling 2010-23 are available through the IRS website.
For more information and guidance on healthcare reform, visit Healthcare Reform: A Resource Center for Employers, on Compensation.BLR.com.
Source:
IRS