OTC Changes Effective January 1, 2011

As of January 1, 2011, Health FSAs and HRAs will not be able to reimburse over-the-counter (OTC) medicines or drugs (other than insulin) without a doctor's prescription; similar restrictions will apply to HSAs. Over-the-counter medicine expenses will only be reimbursable if participants have a prescription. Other OTC items such as medical supplies, that are not medicines or drugs, such as contact lens solution and bandages, will still be covered. This change aligns what is currently allowable as an IRS qualified medical expense deduction if you itemize your medical expenses with what will be allowed under an FSA/HSA/HRA plan.

This change is effective January 1, 2011 regardless of when the plan year starts or grace period that may be in effect for 2010 plan years. The change in OTC eligibility is not a change in status that will allow any mid-year changes to participant's elections.

BPC Benefits Card (flex debit card) users will not be able to use their cards to purchase OTC items on or after January 1, 2011. Because OTC medicines are no longer eligible for reimbursement without a prescription, they will not be listed in the IIAS eligible item list and therefore cannot be purchased with the card at IIAS merchants. Starting Jan 1, 2011, the participant will need to get a prescription from their medical provider, submit the prescription with the detailed receipt purchased and a signed claim form to BPC to be reimbursed for OTC medicine or drugs.

This change in eligibility for OTC drugs & medicines will require an amendment to all FSA plans, and any HRA plan that allowed OTC expenses. BPC will produce and send the required amendment(s) to you before the end of 2010.