Asked and Answered: Can you explain the OTC prescription requirement?

Update: As of March 2020 with the passage of the CARES Act, the OTC Rx requirement has been repealed and prescriptions are no longer necessary to purchase over-the-counter medicines with an FSA or HSA.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.

Since open enrollment is well underway, and we're speaking to a growing group of new FSA owners, it's only right that we revisit one of our most-common questions -- why do we need a prescription to buy over-the-counter (OTC) meds with our FSA cards?

If you've wondered about this, we definitely understand your confusion. Obviously, if you wanted to purchase OTC products like ibuprofen or cold medicine with a standard form of payment, you wouldn't need a script for them. So why would you need to prove a medical need to use tax-free funds? Let's get one thing out of the way, it's a requirement imposed by the Patient Protection and Affordable Care Act (PPACA) and enforced by the IRS.

A quick history lesson

The answer dates back to January 1, 2011 -- a veritable lifetime in consumer healthcare years -- when the government passed PPACA. This law established a new uniform standard for medical expenses, meaning OTC products containing an active medical ingredient of any kind would require a prescription from a doctor.

But the government isn't doing this to make things more difficult, or even to discourage use of tax-free funds. Instead, the initial thinking was that this OTC provision would help raise revenue to expand coverage for uninsured Americans.

So, long story short, if you want to buy these products without having to pay taxes on them, you'll need to verify a qualified medical need for doing so. This includes the items mentioned above, alongside any other pain relievers, cold and allergy remedies, and even cough drops.

Some OTC favorites

Don't worry!

It's not like the OTC rule applies to everything on our site - just things that contain an active medicinal ingredient. So, medical supplies like crutches, bandages and even diagnostic devices still qualify for FSA reimbursement without any other documentation. In fact, of the 4,000+ eligible items in our store, only a small percentage requires a prescription, so shop with confidence!

And to add to that confidence and create less confusion, we even make it easy for you to decipher which products require a prescription and which do not, with a simple check mark symbol for no prescription required and an Rx symbol for when it is.

Are there changes coming?

There's always hope, but we don't like to think of the OTC provision as "something to work around.". Does it make things slightly more complicated for FSA users? Maybe… but we have our own answer for this -- the Prescription Process.

By using this simple tool, if you purchase eligible OTC medicines at FSAstore.com, you just need to click on the prescription banner to get started. Then, you simply need to provide a physician's name, address and phone number, and our pharmacy partner will reach out directly for the required docs to help you obtain the prescription to complete the purchase. No other work is required.

So, reform might be underway in Washington, but at least you know you have a way to buy these products tax-free, with minimal fuss. Once you start seeing the savings, we think you'll realize it's about as effortless as can be.


From FSA basics to the most specific account details, in our weekly Asked and Answered column, our team gets to the bottom of your most-pressing flex spending questions. It appears every Wednesday, exclusively on the FSAstore.com Learning Center. And for the latest info about your health and financial wellness, be sure to follow us on Facebook, Instagram and Twitter.

Delay in SHOP Online Enrollment for Many Small Businesses

The Obama administration is delaying online enrollment for many small businesses. Businesses under 50 participating in states where the Small Business Health Options Program (SHOP) is federally governed will have to wait until November 1 to submit their applications online. They’ll still be able to browse options and submit their application in hard copy; they just won’t be able to submit the application electronically until November 1. Individuals will continue to be able to enroll online on October 1.

Both delays are not ideal for the Obama administration, but officials continue to point out that coverage and enrollment will not be delayed, and that individuals will be enrolled as they would have by January 1.Although the delay shouldn’t affect enrollment by January 1, it is likely to fuel on-going political debates over whether or not the law itself is sound enough to launch this year. To add to the mix, the Obama administration also announced on Wednesday that the Spanish version of the healthcare.gov website wouldn’t be ready for several more weeks, so enrollment for Spanish-speaking individuals would be delayed.

Check in on our FSAstore.com blog as we'll keep you updated on the latest health reform and FSA news.

Health Care in America

It’s a source of anxiety for a lot of Americans: health insurance costs. According to a Rasmussen poll, 53% of Americans have an “unfavorable” position on the Patient Protection Affordable Care Act (PPACA), thinking that the new health reform law will increase costs.

According to the New York Times however, health insurance costs are already high, with or without the ACA:

“Whether directly from their wallets or through insurance policies, Americans pay more for almost every interaction with the medical system. They are typically prescribed more expensive procedures and tests than people in other countries, no matter if those nations operate a private or national health system.” (New York Times, June 2013)

The quote above is substantiated by an “International Federation of Health Plans 2012 Comparative Price” report. That report examines medical and hospital costs for different countries. One scary trend shows Americans are overpaying across mostly every category.

Be sure to regularly check in for health reform updates on our FSAstore.com blog. And, we'll keep you posted on all things FSA!


Notifying your employees of PPACA coverage

If you're scratching your head about Patient Protection and Affordable Care Act (PPACA or ACA) provisions affecting your business, you're likely not the only one. Starting October 1, open enrollment begins for the Jan. 1, 2014 PPACA mandated Health Insurance Marketplace, previously known as the Exchange. All employers must notify their existing employees of this Marketplace no later than October 1, 2013, regardless of open enrollment or employer coverage. As of October 1, any new employee should be given the notice immediately upon hire.

Why do I need to notify my employees of upcoming PPACA changes?

According to the Fair Labor Standards Act (FLSA) that's part of PPACA, all employees must be notified of coverage options available to them in the Marketplace. Notices must be provided to new hires within 14 days of their start date.

What should I include in the notice?

According to the Department of Labor (DOL), a written notice should be given to all employees:

1. "Informing the employee of the existence of the Marketplace (referred to in the statute as the Exchange) including a description of the services provided by the Marketplace, and the manner in which the employee may contact the Marketplace to request assistance;

2. If the employer plan's share of the total allowed costs of benefits provided under the plan is less than 60 percent of such costs, that the employee may be eligible for a premium tax credit under section 36B of the Internal Revenue Code (the Code) ift he employee purchases a qualifed health plan through the Marketplace; and

3. If the employee purchases a qualifed health plan through the Marketplae, the employee may lose the employer contribution (if any) to any health benefits plan offered by the employer and that all or a porition of such contribution may be exluable from income for Federal income tax purposes."

The notice should go out to each individual employee whether this employee works full-time or part-time. It should be written in a way that is understandable to the "average employee," the DOL added.

When should I notify my employees by?

IMPORTANT: If you are an employer subject to FLSA and haven't notified your employees about the Health Insurance Marketplace, you must do so prior to October 1. The notification applies even if your employees are already covered by a company health plan and regardless of your open enrollment date.

The DOL has provided a model notice to help you understand what should be communicated to your employees.

FSAstore.com reviews and provides guidance on any new regulations issued. Visit our blog frequently to keep up-to-date on the latest impacts of PPACA.