Over-the-Counter Drugs and Flexible Spending Accounts
Effective January 1, 2011, the purchase of OTC "drug and medicine" items with FSA account funds will no longer be allowable, unless you have a Certificate of Medical Necessity (CMN) completed by your physician. Examples of drug and medicine categories include cough, cold and flu products, allergy and sinus products, acid controllers, pain relief, sleep aids, and antibiotic products. Also, drug and medicine items, permitted due to the CMN, must be paid for at the point of service, and you must submit a manual claim for reimbursement. Items classified as "not drug and medicine" are not affected by the new rules.
Employers should communicate these changes to their employees in order for them to properly plan the amount to elect for their FSA's for 2011. Employers should also remind employees to plan ahead and purchase "drug and medicine" items prior to January 1, 2011 in order to spend down account balances. This is especially true if you are in an "off-calendar" Plan year cycle and your employee's current elections carry into 2011. They may have budgeted expenses for 2011 that will no longer be eligible.
