Proposal would put OTC meds back into flex plan eligibility

One of the biggest complaints employees have about their FSAs is the fact they need a doctor’s prescription to be reimbursed for over-the-counter (OTC) medications. But that controversial rule may soon be a thing of the past.  

That’s because H.R. 1270 Restoring Access to Medication and Improving Health Savings Act of 2016, a bill introduced by Rep. Lynn Jenkins (R-KS), was just approved by the House of Representatives by a 243-164 vote. The bill would allow employees to again use their FSAs, HSAs and HRAs to pay for OTC medications without a doctor’s prescription.

Now the bill is headed for its next test: A Senate vote.

Of the ACA rule governing tax-advantaged accounts, Rep. Jenkins said it:

“makes no sense requiring individuals to see their doctor simply to get a prescriptions for common cold medication.”

This isn’t the first time Congress has tried to do away with the health reform law’s OTC restrictions. Back in 2013, The Restoring Access to Medication Act (S. 1647), was introduced by Sen. Pat Roberts (R-KS) and Sen. Mary Landrieu (D-LA). The legislation aimed to repeal the ban on OTC restrictions and allow account-holders to purchase OTC meds with using tax-free FSA money.

Describing the necessity for the bill, Sen. Roberts said:

“rather than promoting cost-effectiveness and accessibility, this provision (the ban on non-prescribed drugs) directs people to potentially more costly, less convenient and more time-consuming alternatives.”

That pesky ACA reg

The health reform law made two major — and generally unpopular — changes to FSAs.

In 2011, the ACA created a ruling that prohibiting employees from using FSAs, HSAs and HRA for reimbursement of OTC meds unless:

• the meds are insulin
• medical supplies like bandages, crutches or diagnostic devices, or
• they’re prescribed by a physician.

Another widely criticized change to FSAs under Obamacare: The $2,500 cap on the pre-tax contributions that could be made to these accounts, which kicked in on Jan. 1, 2013.

Prior to this provision, there had been no legal limits on FSA contributions; however, most firms set their own, which were normally in the neighborhood of $4,000 to $5,000 per year.

Ever since these rules took effect, they have been widely criticized by businesses and healthcare groups.