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  4. rjr

    Ok, so I get this ruling and I believe I’ve complied with this anyway under my HSA. But I have a question for which I’ve never known the answer. I pay for my contact lenses with my HSA funds. But could I also pay for my contact lense solution/cleaning supplies, etc. with HSA funds? It was always too difficult in the past for this to be an issue (I never used HSA funds before to purchase these items), but now I have a HSA Debit Card and wonder if I can’t start purchasing my contact supplies with those funds.

  5. Laura

    While researching this topic I came accross a press release from the US Department of Treasury in 2003. Looks like that’s when they decided to allow non-prescription drugs to be deductable through FSA’s. From the release:
    “Flexible Spending Accounts are an important tool in helping people meet their health care costs,” stated Treasury Secretary John Snow. “Since many prescription drugs have moved to the over-the-counter market, this action today makes paying for them a little bit easier to swallow.”

    “Flexible Spending Accounts were established under the tax code to provide incentives for better health care,” said IRS Commissioner Mark W. Everson. “This action is a sensible expansion and simplification of the program consistent with existing law.”

    I guess they changed their minds.

  6. Ted Hamilton, SPHR

    Under the new law, at Section 9003, the law is “conformed” to the definition for purposes of medical expenses at IRC §213.

    Interesting that this is going back to the way it was in 1985

  7. Mark D

    I recently became aware of this clause in the Affordable Healthcare Act and would like to share these thoughts:

    This change significantly decreases the value of having a FSA (and maybe that’s the intent). First of all, no one goes to their doctor to get prescriptions for OTC medications…because they are OTC meds, hence don’t require prescriptions! Doesn’t that nullify the value of making a drug OTC?

    The ability to pay for OTC meds with FSA funds helps safeguard against
    the risk inherent with FSAs since they are use-it-or-lose-it. If we do not use all the funds (to which we contribute out of our own pocket), then we lose that money. Each year participants must estimate medical expenses and plan how much money to contribute; however estimates rarely reflect actuals. In years when actual expenses were less than what was allocated to the FSA, participants were able to purchase OTC meds as a method to reduce or eliminate losing unused funds. The IRS rule change now unfairly removes this ability.

    The government cannot not have it both ways; FSA programs that are use-it or lose-it and imposing unfair restrictions on how participants may use their own money to pay for legitimate medical expenses.

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