One of the provisions of the Patient Protection and Affordable Care Act changes the rules regarding over-the-counter drugs and health spending accounts.

Beginning Jan. 1, 2011, over-the-counter drugs are no longer eligible medical expenses under an FSA, HSA or HRA, unless accompanied by a prescription (with the exception of insulin). This effective date applies regardless of when the employer's plan year begins and regardless of any grace period for health FSAs.

This rule does not include medical equipment and supplies, such as crutches, bandages and blood sugar test kits, which may still be reimbursed without a prescription.

Employers are required to amend their cafeteria plan documents to conform to this new requirement. Generally, such cafeteria plan amendments may be effective only prospectively.

However, guidance released by the IRS allows employers to amend their plan documents to conform to the new OTC drug requirements, effective retroactively for expenses incurred after Dec. 31, 2010, as long as the amendments are adopted no later than June 30, 2011.

If you have not already amended your cafeteria plan document to comply with the new OTC regulations, you should make necessary changes by June 30, 2011.

The official IRS notice regarding this guidance may be found at: www.ecfc.org/files/legislative-news/n-10-59.pdf