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Tax free OTC drugs through a Health Care FSA
Tax free OTC drugs through a Health Care FSA
IRS allows over the counter drugs to be tax-free through a Health Care FSA. Wednesday September 3, 2003 the IRS and Treasury Department released Revenue Ruling 2003-102, which contains the biggest news in years for Health Care Flexible Spending Accounts; over the counter drugs and medicines may be reimbursed by a Health Care FSA. No prescription from a doctor is necessary. The Revenue Ruling does not specify an effective date. Therefore, since East Valley School District's documents are worded broadly to include Section 213 expenses and this revenue ruling is merely a "new interpretation by the IRS" of Code Section 213 - current plan participants can submit expenses retroactively to the beginning of the current Plan Year. What does this mean for current plan participants? - Participants can change their annual election until October 10, 2003.
- Participants can make claims for over the counter drugs now. Claims for these drugs can be made retroactively to beginning of the current plan year.
- Claims must have proper substantiation: a receipt showing the date the drug/medication was purchased and the type or name of the drug/medication must be clear. (ie. Tylenol, Advil, antacid etc.)
- Common drug expenses that are allowed under this new ruling are: antacids, aspirin, pain relievers, cold and flu medicines, allergy medicines etc.
- Drugs or medicines that are NOT allowed are: dietary supplements, vitamins, herbal remedies etc.
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