IRS Issues Guidance on Changes to FSA Drug Cost Reimbursements

For over 50 years, Bloomberg BNA’s renowned flagship daily news service, Daily Tax Report® has helped leading practitioners and policymakers stay on the cutting edge of taxation and...

IRS issues Notice 2010-59 and Rev. Rul. 2010-23, which provide guidance reflecting statutory changes to flexible spending arrangements, the service says in a news release (IR-2010-95). Under the new standard, established by the Patient Protection and Affordable Care Act (P.L. 111-148), effective Jan. 1, 2011, the cost of an over-the-counter medicine or drug cannot be reimbursed from an FSA or health reimbursement arrangement unless a prescription is obtained, the release says. Prescriptions must be obtained regardless of whether a medication is available without a prescription to qualify for reimbursement from an FSA or HRA, IRS says in Notice 2010–59.