December 2, 2010

Prescriptions Needed for FSA, HRA Reimbursement Starting Jan. 1

If you elect the Health Flexible Spending Account (FSA) or receive the Vanderbilt Health Reimbursement Account (HRA), we want to remind you of the new Internal Revenue Service (IRS) ruling taking effect on Jan. 1, 2011, that will impact over-the-counter (OTC) product purchases.

Under the new rule, any OTC item considered a drug or medicine will require a prescription written by your doctor in order to be reimbursed from your FSA or HRA. This new rule does not apply to reimbursements for insulin, which will continue to be eligible without a prescription.

When does the change take effect and how does it affect the IRS grace period?

The new ruling starts on Jan. 1, 2011. OTC drugs and medicines purchased before Jan. 1, 2011, can still be submitted for reimbursement without a prescription through April 15, 2011. In order to be reimbursed, a prescription would be required for any OTC drug or medicine purchased on or after Jan. 1, 2011, even if the expense is reimbursed from your 2010 FSA or HRA funds during the grace period.

What about using the PayFlex MasterCard?
You won’t be able to use the Master-Card after Jan. 1, 2011, for OTC drugs. To be reimbursed for OTC purchases, you will pay out-of-pocket, then file a claim and include your doctor’s prescription to verify eligibility.

OTC items that are eligible without a prescription, such as bandages, braces/ supports, contact lens solution, etc., may continue to be purchased using the PayFlex MasterCard after January.

Where can you find more OTC info?

View the PayFlex flyer at

Benefits Administration