Benefits and Compensation

Ways and Means Okays Bill to Repeal OTC Rules

Employers and plan administrators that find the over-the-counter drug rules put in place by the health care reform law to be onerous may have relief, if the Ways and Means Committee has its way. The committee on May 31 in a 24-9 vote ordered H.R. 5842, the Restoring Access to Medication Act, reported to the full House.

Rep. Lynn Jenkins, R.-Kans., introduced H.R. 5842 on May 18. The measure would repeal the amendments the Patient Protection and Affordable Care Act made to the federal tax code that disqualify expenses incurred to buy OTC medications from reimbursement through health flexible spending accounts, health savings accounts and health reimbursement arrangements.

The PPACA changed the rules for reimbursing expenditures to purchase OTC medications, putting in place requirement that OTC medications be prescribed by a physician in order for FSA, HSA and HRA funds to be used to cover such expenses. This stipulation does not apply, however, to insulin, bandages, crutches and diagnostic devices.

The current rules regarding covering the cost of OTC medications became effective Jan. 1, 2011. H.R. 5842 calls for the rules to apply to expenses incurred after Dec. 31, 2012.

The bill is now before the full House, but a vote has not yet been scheduled. Similar legislation has been introduced in the Senate by Sen. Pat Roberts, R-Kans. The prospects for H.R. 5842 in the House may be better than in the Senate, given the party control in those chambers. And it is probably unlikely that even if the measure passes in both chambers that the president would sign it into law.

Employers and plan administrators should keep in mind that even though this measure is under consideration, the rules governing OTC medications and how they can be covered through FSAs, HSAs and HRAs remain in force. Therefore, individuals covered by such accounts and arrangements must continue to obtain prescriptions for OTC medications in order to be reimbursed for those expenditures through them.

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