New guidance on the use of health flexible spending accounts (FSA) and health reimbursement arrangement (HRA) debit cards is now available from the IRS. Taxpayers can continue using FSA and HRA debit cards to purchase prescribed over-the-counter medications, according to IRS Notice 2011-5.
Under the Affordable Care Act (ACA), the cost of over-the-counter medicines or drugs can be reimbursed from a health FSA or HRA if a prescription has been obtained. A prescription is not required to purchase insulin.
The prescription is requirement only applies to medicines and drugs. Other health care expenses, such as medical devices and eye glasses, are not subject to the requirement.
Beginning after January 15, 2011, the use of debit cards must comply with procedures reflecting those pharmacies that currently follow when selling prescribed medicines or drugs.
The prescription requirement applies to all purchases made on or after January 1, 2011.
For more information, there are answers frequently asked questions on IRS.gov.