Important Information – Effective 1/1/11:
New legislation on over-the-counter purchases using FSA, HSA or HRA accounts.
The recently enacted Patient Protection and Affordable Care Act of 2010 changes the rules for the purchase of over-the-counter (OTC) products.
5 OTC changes for employers and employees to know:
1 Employees with an FSA, HRA, or HSA can no longer use their account funds to purchase OTC drugs and medicines (e.g. Advil, ibuprofen, cough syrup) unless they have a Note of Medical Necessity (NMN) or a prescription from their doctor.
2 If an employee has an NMN or a prescription for an OTC drug or medicine, they must pay at the point of service and submit a manual claim for reimbursement.
3 Employees can continue to use their FSA, HRA and HSA funds to purchase OTC items that are not considered a drug or a medicine (e.g. bandages, wound care, contact lens solution). Benefits cards can continue to be used for these purchases.
4 If an employee has questions about this OTC change or needs more information, they should call their Plan Administrator at the number on the back of their Card.
5 Employees should consider the new OTC rules when estimating the amount to put in their FSAs, HRAs or HSAs for the next plan year.
- IIAS merchants will be changing their OTC lists before or after the effective date of 1/1/11.
- The OTC change impacts those treated as 90% merchants, in that the calculation for who meets the 90% exception would be based on the new definition of eligible expenses, which excludes OTC drugs and medicines.
- After 1/1/11, if an OTC drug or medicine is purchased at a 90% merchant, a letter will continue to be sent.