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Ring it Up! The IRS Issues Guidelines for Health FSAs and HRAs Allowing Use of Debit Cards to Purchase Over-the-Counter Medicines

The Internal Revenue Service (IRS) on December 23, 2010 issued Notice 2011-5, which includes guidance allowing the continued use of health flexible spending arrangement (FSA), health reimbursement arrangement (HRA), and Archer Medical Savings Account (MSA) debit cards for the purchase of prescribed over-the-counter medicines and drugs.


In September 2010, the IRS issued Notice 2010-59, which provided a uniform definition of a reimbursable expense for FSAs, HRAs, and Archer MSAs. A key part of this new standard definition was that over-the-counter (OTC) medicines could not be reimbursed by FSAs, HRAs, or Archer MSAs unless the participant had a prescription for the item. As a result of this guidance, debit card vendors of such accounts were no longer going to allow the plan debit cards to be used to purchase OTC items after January 15, 2011.

Notice 2011-5 provides that FSA, HRA, and Archer MSA debit cards may be used to purchase OTC medicines at drug stores and pharmacies, non-health care merchants that have pharmacies, and at mail order and Web-based vendors that sell prescriptions, as long as certain requirements are met.

The Aon Hewitt bulletin available below discusses Notice 2011-5 and these requirements in further detail.

Ring it Up! The IRS Issues Guidelines for Health FSAs and HRAs Allowing Use of Debit Cards to Purchase Over-the-Counter Medicines