Health Care Reform Update: Over the Counter Prescription Rules, Ohio Prescription Transfer Limit, and Health Savings Account Tax Reporting
FSA and HRA Reimbursement of Over-the-Counter Prescriptions
Effective January 15, 2011, individuals may use their flexible spending account (FSA) and health reimbursement account (HRA) debit cards to purchase over-the-counter medications with a physician prescription. The additional guidance released by the Internal Revenue Service (IRS) requires pharmacies to follow the same procedures as when selling prescribed medications.
In general, the medication must be prescribed by a physician or other qualified provider. The prescription must be presented to the pharmacist, assigned an Rx number, and dispensed by a pharmacy.
Click here for the complete release on the IRS website or go to http://www.irs.gov/newsroom/article/0,,id=233483,00.html.
New Ohio Prescription Transfer Limit
The Ohio State Board of Pharmacy voted unanimously to limit an individual's ability to transfer prescriptions from one pharmacy to another in November 2010. As of January 1, 2011, Ohioans cannot transfer a prescription more than once per year. This is definitely inconvenient for individuals with high deductible health plans who wish to make sure they receive the best price for their medication. However, high deductible health plans and incentives offered by large retail pharmacies for prescription transfers may negatively impact patient safety. The pharmacy board ultimately felt that multiple transfers may open the door for miscommunication, incomplete patient data, and potential adverse drug interactions.
The new law is similar to current law already in force for controlled substances.
Health Savings Accounts and Tax Reporting
As we enter tax season, we would like to remind our clients and their employees with health savings accounts of their reporting obligations. Employers are responsible for reporting any employer contributions to an employee HSA account and any employee contributions made through pre-tax salary reduction agreement in Box 12, of Form W-2.
Employees are responsible for reporting contributions and distributions from the HSA with their annual tax filing on IRS Form 8889-SA. To complete Form 8889, employees will need Form W-2, Form 1099-SA (distributions), and Form 5498-HS (contributions).
For additional information please contact your HORAN account representative.
