How will Health Savings Account (HSA) debit cards handle OTC medicines and drugs considering the amended regulations?
The regulations do not address the use of HSA debit cards because HSAs do not require purchases to be substantiated by a third party. However, participants should retain all receipts to prove their compliance with the OTC prescription regulations in case of an IRS audit. Any purchases that do not qualify as an eligible expense under the new eligibility rules will be included in the employee’s gross income and subject to a 20% additional tax.
