FSA Prescrip[tion reimbursement

[Guest Neno]

If a doctor prescribes ibuprofen (actually dispensed through the pharmacy) is it reimburseable? I have been told that it may not because it is also available OTC, although not in the same strength. Since this is not the same as "aspirin" I'm thinking it is reimbursable. Any thoughts????

[Guest brobinso]

What is a prescription drug?

The phrase I always use with participants is "prescribed by a physician and dispensed by a pharmacist."

So if they are taking a type or strength of ibuprofen that must be dispensed, by law, by the pharmacist, I'd reimburse it.

Same thing with other items available OTC. For example, prenatal vitamins are available OTC and also by prescription. If you buy the prescription vitamins, they are reimbursable. If you buy OTC vitamins, they are not.

[Guest Comsewogue]

Section 105(B) of the Internal Revenue Code excludes from employee gross income reimbursements for "medical care" (as defined in section 213(d) of the Internal Revenue Code).

Section 213(d) does not appear to require that a medicine must be dispensed by prescription to fall within the definition of "medical care" for purposes of section 213(d). That "prescription-medicine-only" limitation is found elsewhere, in section 213(B) and indirectly in section 213(a), and is relevant for individual taxpayers claiming a deduction, but not for purposes of defining medical care under section 213(d). As such, it does not seem precisely correct to me to say that an expense for a medicine must be deductible under section 213 in order for it to be reimbursed tax-free to an employee under section 105(B). While that has been a safe and convenient rule of thumb (i.e., prescription drug expenses would always be "medical expenses"), the arrival of OTC Claritin and other medicines beg the question whether they might be reimbursed to employees on a tax free basis under an employer health plan, or health FSA, or HRA.

Admittedly, in order for an expense for an OTC (i.e., non-prescription) medicine to qualify as "medical care" under section 213(d), the expense would still have to be incurred for the "for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body." But if that standard could be met, the reimbursement should be excluded from gross income under section 105(B) of the Code.

Any reactions from learned tax counsel out there?

[SLuskin]

We do not reimburse unless the medication is available only by prescription. We do not reimburse prescription ibuprofen, and now we are not reimbursing prescription Claritin for current prescriptions.