ATTENTION: Participants in Flexible Spending, HSA and HRA Plans:

Over-the-Counter Drugs & Medicines became unreimbursable effective January 1, 2011.

The Patient Protection and Affordable Care Act of 2010 significantly alters the rules for the purchase of Over-the-Counter (OTC) products using funds from Flexible Spending Account (FSA), Health Reimbursement Arrangement (HRA) and Health Savings Account (HSA) pre-tax funds, effective January 1, 2011.

If you are currently enrolled (or are re-enrolling) in one of the above-mentioned accounts, please note that OTC drugs and medicines are (effective 1/1/2011) no longer be reimbursable using funds from your account, UNLESS you have a œStatement or Note of Medical Necessity from your doctor/health care provider.

Common items that are currently purchased OTC using FSA/HAS/HRA funds include:  Ibuprofen, Acetaminophen, day/night-time cold medicine, allergy pills, etc.  However, œmedical items that are NOT categorized as œdrugs or medicines --such as bandages, contact lens solution, and eye drops “ are still legally-eligible for payment using HRA/HAS/FSA funds. 

A comprehensive listing of the allowed (and non-allowed) items may be found on IRS Publication 502, located here:

http://www.irs.gov/publications/p502/index.html

Going forward, here are two elements to consider:

• If you are enrolling or re-enrolling in an HRA/HSA/FSA for a new plan year, you should NOT include OTC drugs/medicines when estimating your future plan year expenses.

• If you are taking an OTC under the direction of your doctor or other medical professional, you may wish to request a œNote or Statement of Medical Necessity from said provider.  Please be aware that Third-Party Administrators (the organizations that manage your FSA/HSA/HRA) are no longer be reimbursing OTC drugs/medicines that do NOT have an accompanying œNote or Statement of Medical Necessity.

We will keep you apprised of this provision as more guidance is issued; please do not hesitate to contact us with questions regarding this (or any other benefits-related) matter!

Best Regards,

Michael J. Cramer, J.D.
Compliance Officer, Beneflex Insurance Services, Inc.