FREQUENTLY ASKED QUESTIONS
Over-The-Counter (OTC) Drugs and Medicines
Where can I get a copy of the new IRS Revenue Ruling?
You can get a copy of Revenue Ruling 2003-102 at the following link:
http://www.irs.gov/pub/irs-drop/rr-03-102.pdf 
Based on Revenue Ruling 2003-102, what additional expenses may be reimbursed under my health FSA?
Generally, OTC drugs and medicines purchased to alleviate or treat personal injuries or sickness are reimbursable under the health FSA assuming your plan allows it. Specific examples of allowable OTC drugs and medicines mentioned in the Revenue Ruling include antacids, allergy medicines, pain relievers and cold medicines.
Does the IRS exclude any expenses from being reimbursed under my health FSA?
Yes. Expenses incurred to benefit one's general health are not reimbursable. For example, amounts paid by an employee for dietary supplements, such as vitamins, that are merely beneficial to general health are not reimbursable under a health FSA. Also, toiletries (e.g. toothpaste), cosmetics (e.g. face creams), sundry items, and items used for cosmetic purposes (e.g. Propecia, Rogaine) remain ineligible for reimbursement.
When can I begin to be reimbursed for OTC drugs and medicines?
Although the IRS has stated that OTC drugs and medicines may now be reimbursable under a health FSA, the terms of your employer's health FSA plan must also allow for the reimbursement of such expenses. Charleston Southern University has selected the IRS ruling date of 9/3/03 as the effective date to allow OTC drugs and medicines to be reimbursed under your health FSA.
Can I change my election based on the new Revenue Ruling?
No. This change in IRS position does not constitute a status change as defined under Treasury Regulation Section 1.125-4 (Permitted Election Changes) and consequently no election changes are allowable based on Revenue Ruling 2003-102.
What documentation will I need to submit when requesting reimbursement for an over-the-counter medicine?
In order to substantiate your expense you must submit, along with a completed claim form, a receipt from the merchant where the items were purchased. In addition, the substantiation that you provide must identify the name of the (over-the-counter) OTC drug that was purchased and, in some cases, ADP may need to ask for substantiation showing the reasons the drug was purchased (e.g. in situations where the OTC drug can be taken for both general health and to treat a specific medical condition). ADP will determine, in light of the relevant facts and circumstances, whether an OTC drug is for "medical care."
OVER-THE-COUNTER ITEMS THAT DO NOT QUALIFY FOR REIMBURSEMENT
The items listed below are considered for general health or cosmetic purposes and do not qualify for reimbursement from the Health Care Flexible Spending Account.
• Dietary supplements . Examples include vitamins, energy drinks, energy bars, etc.
• Toiletries . Examples include toothpaste/brush, mouthwash, dental floss, soaps, deodorant, non-medicated shampoo, etc.
• Cosmetics . Examples include face cream, moisturizers, make-up remover, etc.
• Items used for cosmetic purposes continue to be non-reimbursable items (e.g. Propecia, Rogaine, teeth whiteners, etc).
It is important to note that the new ruling allows for over-the-counter medicines and drugs to be paid. Specific examples offered by the IRS as payable include over-the-counter antacids, allergy medicines, pain relievers and cold medicines. Products such as razors, nail polish, lipstick, band-aids, wheat germ, etc., do not qualify as medicines or drugs and should be denied according to your standard processing guidelines.
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