Can employees still use their tax-advantaged health account debit card to purchase over-the-counter (OTC) medicines after December 31, 2010?
No. As of January 15, 2011, tax-advantaged health account card issuers generally will reprogram cards to decline OTC medicines. If you have a prescription for an over-the-counter medicine, you generally must purchase it out-of-pocket and submit a reimbursement claim to your health account carrier, including the prescription from your doctor. (See “IRS Issues Guidance on OTC Medications”) Our company has a two-month “grace period” beyond the end of the year to submit claims for any FSA expenses incurred the previous year. Will OTC medicines purchased without a prescription in 2010 be eligible for reimbursement in 2011? Yes. The OTC restriction on tax-advantaged health accounts applies only to purchases made after 2010; therefore any 2010 receipts for eligible OTC purchases are still eligible for reimbursement even in 2011.
