How helps eliminate the hassle of OTC regulations

Update: As of March 2020 with the passage of the CARES Act, the OTC Rx requirement has been repealed and prescriptions are no longer necessary to purchase over-the-counter medicines with an FSA or HSA. Additionally, menstrual care products like tampons and pads are fully FSA-/HSA-eligible. Learn more here.

The Patient Protection and Affordable Care Act (PPACA) undoubtedly changed the landscape of the American health insurance system. To date, the law has helped more than 9 million Americans receive health insurance with many more expected to enroll in the coming years. While there has been an unprecedented expansion in coverage nationwide, other seemingly subtle changes have made a huge impact in the world of consumer spending accounts.

Employees with Flexible Spending Accounts (FSAs) saw various changes to their benefits, including yearly allocation limits and the OTC medication prescription requirement.

FSA Prescription Requirement

  • The over-the-counter (OTC) medication requirement for FSAs brings the most confusion. In the past, FSA account holders were able to use their tax-free funds to purchase OTC medications, but the new law changed their classification as medical expenses. Under the new regulations:

“…a distribution from an FSA, HRA, HSA or an Archer MSA for a medicine or drug is a tax-free qualified medical expense only if: the medicine or drug requires a prescription, is an over-the-counter medicine or drug and the individual obtains a prescription, or is insulin." Insulin is the clear exception to the Rx requirement.

How FSA Store Helps

  • As a result, FSA account holders who had no obstacles in the past when purchasing OTC medications now have to consult their doctor for prescriptions. This means they need a prescription before purchasing pain relief medications, digestive aids and other items that are usually found on most pharmacy and grocery store shelves.

Thankfully, if your family relies on an FSA to cover healthcare expenses like OTC medications, navigating the OTC provision is easier than ever at We have an extensive selection of FSA eligible products for everything your family will need to stay happy and healthy all year long!

How has the requirement been received?

  • The OTC medication prescription requirement was envisioned to prevent stockpiling of FSA eligible products as well as the general misuse of funds. After three years of being on the books, the OTC requirement now appears to be a major headache for FSA account holders. A recent study conducted by the Consumer Healthcare Products Association (CHPA) of 2,130 random people found that 75 percent of Americans want the law changed to allow the inclusion of OTC medicines (through FSAs) without prescription requirements.

“45 million Americans have FSA and health-savings accounts," Scott Melville, president and CEO of the CHPA told USA Today. “The ACA was supposed to make healthcare more affordable, not more expensive."

What's the future for the OTC requirement?

  • While healthcare reform has been a major success in terms of reducing the uninsured rate throughout the U.S., the law is still a work in progress. Ultimately, it will come down to pressure from the consumer and business spheres to convince Congress to make changes to the law, but it appears that it could be a fact of life for consumer spending account holders for the foreseeable future. Of course, if anything does change, will be sure to let you know.

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