IRS rules have changed with regard to over-the-counter (OTC) medicines and drugs. Effective January 1, 2011, over-the-counter (OTC) medicines and drugs that are not prescribed by a physician will not qualify as a medical expense under IRS Code Section 213(d). As a result, OTC medicines and drugs are ineligible for purchase with an FSA or HRA debit card at a SIGIS certified merchant under the SIGIS IIAS process. Such items, when accompanied by a valid prescription, may be eligible for reimbursement when adjudicated through an alternate method (e.g., paper claim). Thus, even OTC medicines and drugs accompanied by a doctor’s prescription will not be included on the SIGIS List due to the incompatibility of these types of medicines and drugs with the SIGIS IIAS process.
Please review the Eligible Product List Criteria. It is suggested that all SIGIS Members review the section “Not Included as Eligible Products for IIAS Approval: OTC Medicine and Drugs." IRS rules HAVE NOT changed for OTC products that are not medicines or drugs.
The removal of OTC medicines and drugs from the list of qualifying medical expenses will not impact SIGIS Members who have locations registered under the 90% Rule program. Registrants in the 90% Rule program can continue to include “OTC Medicines and Drugs” with other products in determining whether their store locations will qualify under the 90% Rule program..
For more information, please see our webpage on the Patient Protection and Affordable Care Act.