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Over-The-Counter Not Eligible for Flexible Spending Accounts in 2011

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The Patient Protection and Affordable Care Act signed by President Obama in March made a bunch of major changes to health care in America and one of them was to flexible spending accounts. Starting in 2011, over-the-counter products will not be eligible for flexible spending accounts. In fact, they will not be reimbursable under FSAs, health savings accounts (HSA), or health reimbursement arrangements (HRA) unless they are prescribed by a physician. There is only one exception and that’s for insulin.

This means that the days of loading up on band-aids, Tylenol and Advil, and other products you pick up in the drug section of your supermarket are no longer eligible unless your doctor prescribes it. While the rules on what is necessary documentation for reimbursement have yet to be introduced, this might start introducing additional paperwork at the doctor’s office. Advising to take two aspirin and calling it a day might have to come with a prescription.

Also, annual contribution limits to your FSA will be limited to $2,500 a year.

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51 Responses to “Over-The-Counter Not Eligible for Flexible Spending Accounts in 2011”

  1. otipoby says:

    Jim,
    Thanks for the headsup. My company is getting ready to start the healthcare enrollment period. I always put $$ in the FSA (I have 3 kids) thinking that if it gets down to Dec and I have $$ left in it, I could get cough syrup etc.

    Just one more reason I hate the new healthcare plan.

  2. Joe says:

    http://www.irs.gov/newsroom/article/0,,id=227308,00.html

    I googled it some more. Looks like the band-aids and other non-drug supplies are still reimbursable. Medical supplies are still reimbursable but OTC drugs won’t be without a prescription.

  3. Scott says:

    Hmm, yeah, this appears to suck. If people don’t have the fallback option of spending unused FSA money on OTC items at the end of the year, I wonder how many people will cut back on how much they set aside. Basically you’re now taking a gamble on how much you plan to spend on doctor visits (kind of difficult) and prescription drugs (easier).

  4. Scott says:

    Question – where do eyeglasses and contacts fall into this? Are they considered OTC?

  5. tom says:

    Wow… thanks for the heads up from me too.

    As Scott said, now it becomes a huge gamble on your health. I guess you could at least put a couple hundred in there to take care of co-pays and such, but anything over that is a huge crap shoot. Also, if you get really sick/hurt $2,500 probably won’t do much to ease any hospital bills.

    I really wish Congress addressed healthcare costs first instead of coverage, cause at this point the only thing they are doing is adding more of a burden to everyone.

    • Shirley says:

      While I do like the parts of the Healthcare bill about not being able to cancel you for an illness or refuse you for an existing illness, the cost IS adding more of a burden to everyone and we may well find that it is a burden many cannot meet.

      • tom says:

        Agreed, Shirley. I like some of the bill… the part you mentioned and I do agree that coverage is an issue, but cost is the biggest issue of all, not coverage. Decreasing cost automatically increases coverage.

  6. John says:

    It’s clear they are hoping you’ll put money in and have some left over at the end of the year that you can’t use and it ends up going to Uncle Sam. Just another way the goverment is trying to get your money. You’re better off holding that money in your dresser.

  7. Matt K says:

    that’s super sucky. =(

  8. Ken says:

    Our health plan as 250 deductible, may just put that in.

    This new health law is the worst. So much for progress.

  9. freeby50 says:

    Are people really spending large sums of money (like over $100) on over the counter drugs at the end of the year to drain out their FSA? If so then they’re probably putting too much money into the FSA in the first place and/or using too much OTC.

    Or are people buying large amounts of OTC for some legitimate medical reasons that I’m not aware of? I just can’t think of spending >$100 or so a year on valid OTC usage. But maybe I don’t know what people really use OTC for.

    • cubiclegeoff says:

      I’m with you. I rarely ever used my FSA for OTC drugs. Generally I use it for glasses/contacts, prescriptions I know about, and medical appointments I foresee, plus some leeway since it generally can be used into the first few months of the next year. This piece of legislation really doesn’t seem to have much of an impact at all. Now the $2500 limit I can see being an issue, especially if you health care plan has a deductible higher than $2500.

      • Scott says:

        Geoff, it’s your “leeway” that’s affected here. I think most people are now going to cut back and eliminate any leeway lest they lose it at the end of the year (or early the next year as it is).

        • cubiclegeoff says:

          My leeway is only $100 or so, so not a big deal and it could easily be spent on a small reorder of contacts.

          FSAs work best when you know there is a large charge in your future, like a birth or other medical procedure that drains your deductible.

    • tom says:

      You’re right about putting too much in, but it’s always a gamble.

      If you have leftovers, OTC drugs are the best way to drain the excess. Most OTC drugs expire within a year so if you have excess FSA, might as well restock. At least having the ability to buy OTC drugs give you some options with the leftovers.

      With the looming change… I think you’ll see a lot of people stop using FSAs, I know I’m done after this year, not worth it.

      • ziglet19 says:

        I stopped using mine last year, because I had a hard time getting reimbursed. I had to make multiple trips back to my doctor’s office to get additional backup, as they never put what was required by my FSA on the receipt, even when I requested.

    • abdel says:

      I’ve used more than $100 at the end of the year at SAMS to finish off my left over $$ last year. I have a family 5 and thankfully, it just so happened, there were no major incidences. This year was a different story, my flex account was drained within 3 months. So, you never know. It was nice that I was able to utilize the rest on kid’s medicines, tylenol, etc. We went through that this year. So, it really does even itself out if you have a fairly large famiy.

    • sas says:

      If you have several children just bandaids, cough medicine & cold medicine, neosporine and REALLY add up. You also never know what the dental costs will be. This is just the government taking more control in our lives and slowly taking our freedom away.

  10. Roxanne says:

    Insulin is available without a prescription, or did I misunderstand?

    • valerie says:

      Regular and “normal” insulin are available without a prescription (novolin R or N, humulin R or N). Any insulin that has been “improved” to act more quickly or to last longer (Novolog, Humalog, Lantus, Apidra) still requires a prescription.

  11. @Roxanne – I believe some insulin is available without an RX. I remember hearing that you can get Lantus over the counter.

    I have an HSA at my work – I got to say – I’m not a big fan. This isn’t helping the matter.

    I’m a diabetic myself and covering the cost of insulin out of my own paycheck is a massive hit.

  12. Texas Wahoo says:

    Is contact solution an OTC? I spend most of mine on that.

  13. Casey says:

    The limit of $2,500 doesn’t go into effect until 2013.

  14. Jody Dietel says:

    Actually, this article is incorrect. First, all OTC products are still eligible starting January 1, 2011. The Affordable Care Act simply added a requirement that OTC drugs and medicines (cough and cold, allergy, antacids, for example) be prescribed. Bandages, contact lens solution, reading glasses, condoms, ice packs, pregnancy tests and diabetic supplies like insulin, test strips and syringes are all still eligible and DO NOT require a prescription.

    Additionally, the limit of $2500 isn’t imposed until 2013, so my advice is to take advantage of these next few years to stretch your dollar by up to 40% through the use of a Health FSA.

    • muggle93 says:

      Jody:

      Where do you see that the list you included is still going to be eligible? I can’t find anything besides your comment that says contact solution, etc., are still going to be allowed w/o an RX.

      Can you please link your source for this? It’s a pretty big topic going on at my office right now. Thanks! :)

  15. thunderthighs says:

    Ugh, thanks a lot Obama. :(

  16. Tina says:

    Actually, this was one of the things that the Republicans insisted on – pretty easy to look that up. Nickel and dime everyone but the rich seems to be their motto.

    I’d say that you should have a physical and see if you can talk your dr into getting scripts for most everything.

    Lots of folks are just gonna start using the online pharmacies I am sure. What a waste.

    • Jerry says:

      It angers me that the little people are evidently being charged to pay for the cost of new health care legislation. These changes create mass confusion, ambiguity, headaches: for consumers, health plan administrators, pharmacies, physicians. It’s unrealistic that each (yes, each) purchase of a qualifying OTC would “simply” require a prescription – how outrageous. And that we reportedly require paperwork to be mailed in for each reimbusement if it qualifies – rather than rely on our pre-funded debit cards we’ve been using for years now). What a scandalous leap backward and what a tremendous waste of time and money for all involved. I hope consumers and health care providers unite to demand reform of these stupidly perverse changes.

  17. Joe says:

    Is it possible to schedule an appointment and take a list of all the OTC products your family will require and have the doctor complete just one form for all?

  18. Sick of the complaining says:

    This is really a joke…..my parents just called me and said they heard on the news that next year you won’t be able to buy aspirin or tylenol over the counter with out a prescription because of OBABACARE. I laughed, you will still be able to buy it over the counter pain killers without a prescription, you just can’t put it thought your FSA, or HSA ACOUNTS which less then 10% of the US population has…..

    • sas says:

      We can’t just complain we need letters sent to our congressmen any political representative for the people. This may be a little thing but it is only one of the small issues that the government is forcing on us. Bigger issues and the right of personal choices are coming.

  19. Sick of the complaining says:

    AND CHICKEN LITTLE SAID THE SKY IS FALLING THE SKY IS FALLING…AND GUESS WHAT IT DIDN’T……

  20. abdel says:

    I rec’d a letter from my company the other day that just said that we could not use our flexible spending (Mastercard) for OTC’s -we are – however, allowed to purchase these items and put in a manual form (fax) request to get reimbursed for them. So much extra paperwork!!!! But, that’s our government for you.

  21. Gabbie says:

    The media is feeding the public wrong information and causing panic. This only affects people who have FSA or HSA accounts. They can’t charge it to their debit cards unless they have a note from their doctor. Just irresponsible reporting!

  22. Steve says:

    It’s time for change: This nonsence is what ole Barack Hussein Obama did. Hang on it’s just te begining of his antics. FSA has just made a step backwards.

  23. sas says:

    I am really getting confused. I need my fexable spending for the bigger expenses but if we can’t get advil, etc. w/o a prescription.
    Our cost just went up with the doctor visit.

  24. Susie Morgan says:

    This is the most ridiculous thing I have ever heard of. Not being able to use OTC for flex spending. Obama needs to go and his HC changes need to go as well. Please do not vote for this man again! He had his chance and he is blowing it!

  25. sid says:

    How is this making it less difficult and more affordable heathcare?? Now we have to either go with a more expensive perscription OR get a perscription for an over the counter med (which alone makes no sense) and send it in to be reimbursed – - – the Drs also do not have time to write scripts for over the counter meds???? Wasteful and non-sensical.


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