Can I Buy OTC Medication with FSA, HSA, and HRA Funds?

The CARES Act removes an ACA limitation on using FSA, HSA, and HRA funds to pay for over-the-counter medication.

The CARES Act—famous for authorizing the $1,200 Economic Impact Payments that Americans have begun receiving—also includes important, coronavirus-related changes for flexible spending accounts (FSAs), health savings accounts (HSAs), and health reimbursement arrangements (HRAs).

This isn’t the first time that changes have been made to tax-advantaged health plans during the coronavirus outbreak. As noted in a previous Taxing Subjects blog, the IRS issued a notice allowing taxpayers with high-deductible health plans to pay for COVID-19 medical care with funds in a qualifying HSA account. NPR’s Selena Simmons-Duffin’s reports that this CARES Act change further expands how policy holders can spend funds in their FSA, HSA, or HRA by classifying other-the-counter (OTC) medication and medical products as reimbursable expenses.

Essentially, the CARES Act removes an Affordable Care Act provision stipulating that only prescribed medication qualified to be purchased with FSA, HSA, and HRA funds—disallowing OTC meds. Simmons-Duffin speculates that this change will help the policy holders “[stock] up on fever reducers and cough medicine as the coronavirus spreads around the country,” something that could affect “‘nearly 60 million Americans.’”

Depending on the length and severity of the COVID-19 outbreak, Congress could pass further tax relief measures in the coming months. Just this week, the House of Representatives seems poised to pass a bill providing relief to small businesses. For the latest coronavirus tax relief information, be sure to regularly check “Coronavirus Tax Relief and Economic Impact Payments” on IRS.gov.

Source: NPR.org

Story provided by TaxingSubjects.com