FSA Over-The-Counter Changes Coming With The New Year

Published November 2010

With the New Year quickly approaching, BASIC wants employers and FSA participants to be aware of the new changes effective January 1, 2011. Consumers will no longer be able to be reimbursed for Over the Counter (OTC) drugs, medicines and biological products without a prescription or letter of medical necessity from their physician. However, non-medical OTC items will still be reimbursed without a prescription.

Click here to open our FSA Eligibility Worksheet.


This Change:

  • Applies to claims incurred on or after January 1, 2011
  • Applies to grace period and non-calendar year claims incurred beginning January 1, 2011
  • Is not applicable to claims submitted after 1/1/2011 for purchases made in 2010
  • Requires the prescription to be submitted with each claim and renewed yearly.


For all FSA and HRA Debit Cards, the excluded OTC items cannot be purchased with the card. These items will need to be purchased with another form of payment and then a claim can be submitted to BASIC for reimbursement with your physician’s letter of medical necessity or prescription and a receipt for the product purchased.

Things To Do To Prepare:

  • · Purchase your OTC items on or before December 31, 2010. These purchases can be submitted for reimbursement after January 1, 2011 without a prescription as long as they are submitted within the plan year and run-out timeframe.
  • · During your next doctor’s visit, ask for a prescription or ask that they complete BASIC’s Letter of Medical Necessity form (If you are BASIC FSA Participant click here  to open a form you can have your doctor complete).
  • · Consider this change when making your Health Flexible Spending Account (FSA) election at the start of your next plan year.

Additional Questions and Resources

IRS: Questions and Answers on Over-the-Counter Medicines and Drugs
Click here to visit the IRS webpage dedicated to FAQ page regarding OTC items as they relate to FSAs.

BASIC Healthcare Reform webpage
Click here to visit the BASIC Healthcare Reform Resource webpage.

Copy of BASIC Participant Communication
Click here to view the communication BASIC sent to participants in August 2010.

Current BASIC FSA Clients and Participants
Feel free to visit our
FSA Promotional webpage for enrollment materials and renewal information, including an OTC Reminder Payroll Stuffer, or contact your customer service representative at (800) 372-3539.

Interested in BASIC’s FSA Administration
For up to date FSA administration regulations call (888) 602-2742 or request a proposal by
clicking here.

WOOD TVAlso, see BASIC’s FSA Administration mentioned on Wood TV 8 in Grand Rapids, Michigan by clicking here.