The
IRS recently issued a Revenue Ruling that allows Health
FSAs to reimburse many drugs that you purchase over the
counter to treat a specific medical condition or injury.
Prior to the ruling, Health FSAs could only reimburse
expenses incurred for prescription drugs. We have decided
to amend the Health FSA to take advantage of the IRS'
ruling. Attached is a Summary of Material Modifications
(SMM) that provides a new definition of "eligible
medical expenses" that includes OTC drugs in its
scope. You should keep a copy of the SMM with your Health
FSA Summary Plan Description (SPD).
Before
you purchase an OTC drug for which you plan to seek reimbursement,
you should remember that the OTC drug must be for "medical
care" as defined by the Internal Revenue Code. An
OTC drug is for "medical care" if it is needed
to treat a medical condition and is generally accepted
as falling within the category of "medicine or drugs".
Items that are merely beneficial to the general health
of the individual are not for "medical care" and
are not reimbursable (e.g. vitamins, nutritional supplements);
however, even these drugs, when taken at a doctor's suggestion
to treat a specific medical condition may be eligible.
In addition, the third party substantiation that you
provide must identify the name of the OTC drug that was
purchased and, in some cases, the claims or plan administrator
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). The claims administrator
(subject to the final discretionary authority of the
Plan Administrator) will determine, in light of the relevant
facts and circumstances, whether an OTC drug is for "medical
care."
