On December 23, 2010, the IRS issued Notice 2011-5 and revised its "Frequently Asked Question" guidance related to the use of health debit cards for prescribed over-the-counter (OTC) medicines and drugs.

This new guidance confirms that after January 15, 2011, BenefitHelp Solutions members with a health FSA and HRA Benefits Card may continue to use the card to purchase OTC medicines and drugs at Inventory Information Approval System (IIAS)merchants provided that the following requirements are met:

• prior to purchase, a prescription is presented to the pharmacist,
• the OTC drug is dispensed by the pharmacist in accordance with applicable legal requirements,
• an Rx number is assigned,
• the pharmacy or other vendor retains a record of the Rx number, the name of the purchaser or patient, and the date and amount of the purchase,
• the records are available to the employer or its agent upon request;
• the card system will not accept a transaction for an OTC drug unless an Rx number has been assigned; and
• the existing IRS requirements regarding card programs are satisfied.

Over the next several weeks, merchants and vendors will be working to ensure consistency with all of the requirements of the new IRS guidance.

The IRS guidance can be accessed at the Notice: 

http://www.irs.gov/pub/irs-drop/n-11-05.pdf

News Release: http://www.irs.gov/newsroom/article/0,,id=233483,00.html

Q&As: http://www.irs.gov/newsroom/article/0,,id=227308,00.html

If you have any questions, you may contact BenefitHelp Solutions customer service at 503-219-3679 or 888-398-8057.