IRS offers new guidance on FSA and HRA debit cards

The Internal Revenue Service has released new guidance regarding Health Flexible Spending Arrangements (FSAs) and Health Reimbursement Arrangements (HRAs), and last week specifically addressed the use of debit cards for the purchase of “prescribed” over-the-counter (OTC) medicines and drugs under these Plans. 

Per the IRS, health FSA and HRA debit cards may continue to be used to purchase OTC medicines or drugs at pharmacies, and via mail order or web-based vendors. Meanwhile, use of said cards must comply with practices currently employed by pharmacies:  a prescription must be presented to the pharmacy that dispenses the medication, a prescription number must be assigned, and proper recordkeeping must be maintained.

Due to a provision within the Patient Protection & Affordable Care Act, the cost of OTC drugs is reimbursable only if accompanied by a prescription (or equivalent document) signed by your medical practitioner. This policy applies to purchases made on or after January 1, 2011. It does not apply to insulin and other health care expenses such as medical devices, eye glasses, or contact lenses.  

TASC is currently analyzing this recent development and its effect (if any) on our OTC Prescription Order Form. Watch for more updates about this and other healthcare reform topics that impact our Plans. For more information regarding IRS Notice 2011-5, visit

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