Question: What is changing with the reimbursement of over the counter medications from spending accounts?
Answer: The Patient Protection and Affordable Care Act (PPACA) includes a provision which eliminates the reimbursement for over the counter (OTC) medications – those that can be obtained without a prescription - from a Flexible Spending, Health Saving, or Health Reimbursement Account effective January 1, 2011. OTC medications cannot be reimbursed without a prescription after this date. The exclusion applies even if a health plan is granted the two and a half-month grace period applicable to certain plans. The IRS recently issued a Notice, Revenue Ruling and questions and answers regarding the new provision. See the following links to access these documents:
Revenue Ruling: http://www.irs.gov/pub/irs-drop/rr-10-23.pdf
Questions and Answers: http://www.irs.gov/newsroom/article/0,,id=227308,00.html
Health Care Reform Q&A is facilitated by the VSCPA Insurance Center. Have a question? Leave a comment, or contact the VSCPA Insurance Center directly. This document is not intended to imply or provide tax or legal advice and is the VSCPA Insurance Center's current interpretation of the Health Reform Bill.