Patients often have with their insurance plans a flexible spending arrangement (FSA) or health reimbursement arrangement (HRA) or health spending account (HSA), which give them preferred tax treatment. If you have a large percentage of your patients with these flexible reimbursement mechanisms, you’ll want to be aware of a rule change that’s coming.
Starting Jan. 1, patients will not be able to use funds from their FSAs, HRAs or HSAs for over-the-counter medicines – unless they have a prescription. That means you may be busier with calls and requests for prescriptions for allergy meds, cold tablets and other items that patients previously purchased freely from their spending accounts and submitted for reimbursement.
However, diabetic patients will continue to be permitted to purchase insulin without a prescription. Medical equipment such as crutches, bandages and test kits will still be tax-free if purchased through a FSA, HRA or HSA, regardless of whether a prescription is submitted.
These changes result from the Affordable Care Act as a way to create a uniform standard for medical expenses. Section 9003 of the act states that as of Jan. 1, 2011, only prescribed medicines or drugs can be considered qualifying medical expenses subject to preferred tax treatment.
For a question and answer page on this rule, see here.