Benefit update: over-the-counter medicines.The Internal Revenue Service has ruled that Flexible Spending Accounts flexible spending account, n an employee reimbursement account primarily funded with employee-designated salary reductions. Funds are reimbursed to the employee for health care (medical and/or dental), dependent care, and/or legal expenses and are (FSAs) can pay for over-the-counter medicines with pre-tax dollars if their plans allow it. FSAs let employees put a limited amount of pretax income pretax income Reported income before the deduction of income taxes. Pretax income is sometimes considered a better measure of a firm's performance than aftertax income because taxes in one period may be influenced by activities in earlier periods. into an account each year to pay for certain out-of-pocket health-care expenses. Employees receive reimbursement from the account after they submit a receipt for qualified expenses. The money in the account is never taxed, although anything left in the account at the end of the year is forfeited. Many drugs that previously had to be prescribed, such as Claritin, are now available over the counter. While an over-the-counter drug over-the-counter drug A therapeutic agent that does not require a prescription, which the FDA feels can be safely self-prescribed by non-physicians. Cf Prescription drug, Under-the-counter. is less expensive than the prescription drug prescription drug Prescription medication Pharmacology An FDA-approved drug which must, by federal law or regulation, be dispensed only pursuant to a prescription–eg, finished dose form and active ingredients subject to the provisos of the Federal Food, Drug, , the cost to the consumer increases if the price paid by the consumer for the over-the-counter drug is greater than the consumer's co-payment when the drug was covered by insurance. This ruling should cover aspirin, antacids Antacids Definition Antacids are medicines that neutralize stomach acid. Purpose Antacids are used to relieve acid indigestion, upset stomach, sour stomach, and heartburn. , acne medicine and other over-the-counter medicines, but will not cover vitamins, dietary aids, toiletries toi·let·ry n. pl. toi·let·ries An article, such as toothpaste or a hairbrush, used in personal grooming or dressing. toiletries npl → artículos mpl de aseo (= and cosmetics or items that are beneficial to the general good health of the employee, spouse or dependent. In either of the latter two cases, the drug costs are not eligible for itemized medical deductions. Companies planning to take advantage of this change must amend their plan documents if they do not include any language concerning over-the-counter medicines. The ruling should be beneficial for employees in 2004, especially with election and open enrollment periods now gearing up for most employers. Employees will still need to produce a receipt to receive reimbursement. (See page 16 for an update on FSA debit cards.) Source: American Society of Employers |
|
||||||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion