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Big Flexible Spending Account Change for 2011

Posted on: November 19th, 2010 | Category: Government Regulatory & Compliance Issues, Human Resources, Our Blog, Resumes, Tax Issues

prescription-noteJust a heads up for our readers about a major change to flexible spending arrangements (commonly referred to as flexible spending accounts or FSAs). New requirements for 2011 will go into affect as of the first of the year that will make it necessary for people to have a doctor’s prescription for many of their over-the-counter medications in order for those drugs to be reimbursable through their FSAs. Be sure you and your employees take this into consideration as you make annual FSA elections right.

According to, The Internal Revenue Service (IRS) recently issued guidance reflecting statutory changes regarding the use of certain tax-favored arrangements, such as FSAs, to pay for over-the-counter medicines and drugs. This was done in accordance with The Affordable Care Act, which made a new uniform standard for FSAs and health reimbursement arrangements (HRAs). A similar rule also goes into effect for health savings accounts (HSAs) and Archer medical savings accounts (MSAs).

Thanks to our own Kelly Coblentz for sharing the list below of OTC Drugs requiring a doctor’s prescription as of January 1, 2011:

  • Acid Controllers
  • Allergy & Sinus
  • Antibiotic Products
  • Antidiarrheals
  • Anti-Gas
  • Anti-Itch & Insect Bite
  • Anti-Parasitic Treatments
  • Baby Rash Ointments/Creams
  • Cold Sore Remedies
  • Stomach Remedies
  • Cough, Cold and Flu
  • Digestive Aids
  • Feminine Anti-Fungal/Anti-itch
  • Hemorrhoid Preps
  • Laxatives
  • Motion Sickness
  • Pain Relief
  • Respiratory Treatments
  • Sleep Aids & Sedatives

The new 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.

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