ObamaCare OTC: a prescription for confusion

ObamaCare restrictions on the use of over-the-counter (OTC) medications will begin on January 1, 2011.  The new OTC regulations will make the convenient inconvenient, eliminate cost-effective treatments and increase costs, change tax advantages to tax penalties, and decrease choice.  Patients with Flexible Spending Accounts (FSAs), Health Reimbursement Arrangements (HRAs), or Health Savings Accounts (HSAs) who purchase OTC medicines with their account debit cards will find denial, confusion, and disappointment at the pharmacy checkout counter.

Those with FSAs or HRAs who expect to be reimbursed from their accounts will have their claims rejected.  Those with HSAs may find themselves with an IRS audit and a 20-percent excise tax penalty for making an ineligible withdrawal. That’s not all. In 2011, ObamaCare will reduce the amount of money that can be set aside in FSAs for medical care from $5,000 to $2,500.

Many healthcare plans allow patients to pay for their medications with debit cards.  As part of their insurance plans, families can use HSAs, HRAs, and FSAs to purchase OTC medications to treat specific conditions.

Under ObamaCare, OTC drugs, medicines, and biologicals will need a doctor’s prescription in order to be defined by the IRS as a qualified medical expense (QME) eligible for HSA, HRA, or FSA reimbursement.  Under ObamaCare, patients will need doctors’ prescriptions even for medications that are available over the counter.  In addition, on January 1, 2011, the excise tax penalty for using HSA funds for ineligible medical expenses will increase from 10 percent to 20 percent.

It is all very confusing.  Depending on the plan’s interpretation of the new law, the following are examples of medications that may require a doctor’s prescription in order to be an IRS-eligible QME:

Acid controllers
Allergy and sinus
Antibiotic products
Anti-itch and insect bite
Cold sore remedies
Feminine anti-fungal and anti-itch
Pain relief
Sleep aids and sedatives