Tax Facts

442 / How does health care reform affect employer-provided plans, including flexible spending arrangements, reimbursement arrangements, savings accounts, and Archer medical savings accounts, that pay for non-prescription medicines?

Section 9003 of the ACA adds IRC Section 106(f), which revises the definition of medical expenses for employer-provided accident and health plans, including health flexible spending arrangements (health FSAs) and health reimbursement arrangements (HRAs). Section 9003 also revises the definition of qualified medical expenses for health savings accounts and Archer medical savings accounts.

Prior to 2020, over-the-counter drugs were not eligible for reimbursement by these plans unless a physician issued a prescription. The requirement was removed in 2020. Prior to that, for example, if a physician were to prescribe aspirin, this expense could be reimbursed but the purchase of aspirin without a prescription could not be reimbursed.

Other changes in health FSAs and HRAs are discussed in the following Q&As.

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