OTC under new regulations

[Nathan]

If a 125 plan were to be amended to remove OTC items from the eligilbe list of reimbursable items to make administration easier would OTC items that participants have received a prescription for be reimbursable as a "prescription" or would these items always be considered "OTC items" regardless of any prescription they may have received, thus making the item ineligible for reimbursement?

I have read several articles that imply that many Employers are electing to remove OTCs all together to limit any potential problems with the determination of what are "drugs" and what are "Medicines" under the new regulations. Are a lot of Employers or TPAs removing OTC items all together?

[SLuskin]

If a 125 plan were to be amended to remove OTC items from the eligilbe list of reimbursable items to make administration easier would OTC items that participants have received a prescription for be reimbursable as a "prescription" or would these items always be considered "OTC items" regardless of any prescription they may have received, thus making the item ineligible for reimbursement?

I have read several articles that imply that many Employers are electing to remove OTCs all together to limit any potential problems with the determination of what are "drugs" and what are "Medicines" under the new regulations. Are a lot of Employers or TPAs removing OTC items all together?

If worded correctly, it would mean all otc drugs and medicines with a prescription. The ones without a prescription are already excluded. The documents need to be amended one way or another to reflect if that plan sponsor does or does not want to reimburse the otc's with rx.

[bcspace]

What about that used to maintain medical devices? Contact lens solution for example. My understanding is that such is not precluded as an OTC Drug and is reimbursible without a prescription. Is that correct?

[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.

OTC medications or drugs a physician writes a RX for are not prescribed drug or medicine. For instance OTC cold medicine, doc writes RX for Vicks DM cough syrup that is not a RX formulation and is not eligible for reimbursement, according to pre OTC eligibility under Sec. 105(b) amendment in 2003, and as of the effective date of the above HCReform amendment issued in March? 2010, effective tax year beginning 01/01/11?, regardless of plan year.

Prior to OTCs becoming eligible under Sec. 105(b) in 2003?, there were facts and circumstances that might allow otherwise ineligible OTC medicines or drugs reimbursable from Medical FSAs. For instance a diagnosis of ITAs (patient w/history of 'mini' stroke type disorder resulting in brain 'scars' or lesions on MRI films), that a doc could write RX for baby asprin x times a day as long term treatement, would be considered eligible OTC for MFSA reimbursement. This and similar circumstances were the only type of OTCs considered eligible for reimbursement from Medical FSA based on facts and circumstances, prior to OTCs becoming eligible by Sec. 105(b) amendment in 2003? providing OTC eligibility, and March 2010? HCReform amendment under Sec. 106(f) and section 105 quoted above, reversing the OTC eligibility and the Sec. 105 (b) 2003 amendment.

For eligible OTCs some pharmacies refuse to accept RX for OTC meds, others attach a RX lable on the OTC medicine. In cases where pharmacy refused the the RX for OTC, participants were required to submit the register receipt and the written RX, with a DX, considering facts/circumstances.

There are older formulations of insulin available w/out RX, that remain eligible under the HCReform amendment above.

Also, determined without regard to whether such drug is available without a prescription, I understand to mean reimbursement of RX Prilosec can not be refused because non-RX Prilosec formulation is available.

OTC medicines, drugs and non-drug items are not eligible for reimbursement from a Medical FSA, unless the facts and circumstances? are met, w/medical necessity & DX, similar to ITA example above, or non-RX insulin.

Included in the eligible class would be medical supplies and similar items under Sec. 213, where for example there is dx resulting in paralysis, the cost of equipement to transfer from bed to wheelchair, and supplies such as swabs and syringes for self injection RX meds. Recently, some injectible meds are dispensed in a 'kit' w/pre-filled syringes and swabs delivered to patients, supplies all inclusive, eliminating the necessity of purchasing supplies seperately. This is becoming more routine.

Cost, (less capital gain if any) of making participant's primary residence W/C accessible due to medical necessity; installing ramps, or central AC systems and similar home improvement costs if medically necessary and consistent with the DX/RX, are eligible, less any increase in value of property. The cost of converting Vans and other vehicles to handicap accessible with hand only accelerators and brakes, W/Chair lift, etc.

Contact lens solutions are eligible by virtue of contacts rendered un-usable w/out solutions, and medically necessary.

Before making a decission to eliminate the OTC classification, consider that OTC reimbursable expenses are rare, and those most in need of the costliest items will qualify for Sec. 125 non-RX medicines, drugs, supplies, vehicle conversions and home improvements.