Medical supplies and FSA

[SLuskin]

After December 31, 2010, will medical supplies such as blood pressure monitors, reading glasses to correct far-sightedness, fever thermometers, etc. still be reimbursable under an FSA?

Thanks.

[LRDG]

My understanding is because of the repeal of OTCs in Sec. 105(b), OTC expenses will be ineligible for reimbursement from ER sponsored health plans, including MFSA, HRA, MRAs.

That will leave Sec. 213, for deductible eligible medically necessary expenses for tax payers. Sec. 213 specifically prohibits OTC expenses.

Sec. 213 allows medical supplies for medically necessary expenses. Medically necessary standard requires a diagnosis by a physician and a corresponding RX. Contact lens solutions are eligible because contact lens are medical treatment to correct vision, and contact lens are unusable without solution.

Blood pressure monitors if there is a BP dx and written RX/recommendation from a physician. OTC reading glasses would not be eligible, vs RX'd glasses to correct far-sightedness by a physican would be eligible. Fever thermometers if necessary for treatment of infertility, substantiated by a physican.

[masteff]

Correction: the OTC repeal applies to medications and drugs w/out a prescription only. It does not apply to non-drug items like bandages, etc.

LRDG - you need to read Section 9003 of PPACA... you're misunderstanding the mechanism by which the change was made... it doesn't directly repeal 105(b), rather it adds the following to 106:

‘‘(f) REIMBURSEMENTS FOR MEDICINE RESTRICTED TO PRESCRIBED

DRUGS AND INSULIN.—For purposes of this section and

section 105, reimbursement for expenses incurred for a medicine

or a drug shall be treated as a reimbursement for medical expenses

only if such medicine or drug is a prescribed drug (determined

without regard to whether such drug is available without a prescription)

or is insulin.’’.

[LRDG]

106(f) REIMBURSEMENTS FOR MEDICINE RESTRICTED TO PRESCRIBED DRUGS AND INSULIN.—

For purposes of this section and section 105, reimbursement for expenses incurred for a medicine or a drug shall be treated as a reimbursement for medical expenses only if such medicine or drug is a prescribed drug (determined without regard to whether such drug is available without a prescription)

or is insulin.

My interpertation of 106(f) expense for medicine or a drug only if it is a prescribed medicine or drug, without regard to whether such drug is available without a perscription. For example, I have a Rx formulary for Prilosec, I can not be required to purchase Prilosec OTC, or have a FSA claim for Rx formulary for Prilosec denied because Prilosec OTC is available.

edited to add:

"Correction: the OTC repeal applies to medications and drugs w/out a prescription only. It does not apply to non-drug items like bandages, etc."

If the OTC repeal applies to medications and drugs w/out rx only, that is what the OTC class of meds is, so I'm not sure what the distinction is that you are making. I'm not sure best use of my doc's time is to write rx's for other people's asprin and badaids. For my own, not so much. That's of course while my doc is diagnosing my disorder that requires a rx for asprin and bandaids.

Guidence from IRS, Labor, or HHS should be published soon to resolve some of this uncertainty.

[masteff]

LRDG - in two threads you appear to be lumping non-drug items (like bandaids and blood pressure monitors) in with OTC medication and drugs. In fact, you refer to "aspirin and bandaids".

My point is that non-drug items are not included in the new language. Meaning, you can't lump bandaids in with aspirin. That's the distinction I'm making. Bandaids, etc. are NOT a medicine or a drug. I don't see the uncertainty that you're alluding to.

[LRDG]

masteff, there are not separate IRS categories for OTC medicines or drugs and OTC non-drug items. I lump OTC's together because a separate OTC Non-Drug category does not exist in the IRC.

You seem to believe when new Sec. 106(f) refers to medicines and drugs that will require RX to be eligible for reimbursement, that a category of 'OTC non-drug items' remains eligible. OTC non-drug items does NOT exist within the IRC as an eligible classification or category.

I am aware of the term 'OTC non-drug items' used by plan administrators to provide examples of the eligible types of expenses to plan participants, but it does not exist in the tax code.

OTC non-drug items are assumed to be eligible based on analysis and by extrapolating from Sec. 213 references to eligible medical 'equipment, supplies, and diagnostic devices', and a couple of PLRs.