ObamaCare restrictions on the use of over-the-counter (OTC) medications will begin on January 1, 2011. In the upside-down world of ObamaCare the new OTC law makes the convenient inconvenient, takes cost effective treatments and increases costs, changes tax advantages to tax penalties, and goes from choice to limitations.
Patients with Flexible Spending Accounts (FSAs), Health Reimbursement Arrangements (HRAs), and Health Savings Accounts (HSAs), who purchase OTC medicines with their account debit cards, will find denial, confusion, and disappointment at the pharmacy checkout counter.
Those with FSAs or HRAs, who expect reimbursements from their accounts, will find their claims have been rejected. Those with HSAs may find themselves with an IRS audit and a 20% excise tax penalty for an ineligible withdrawal.
That’s not all. In 2013, ObamaCare reduces the limit the amount of money that can be set aside in FSAs for medical care from $5,000 to $2,500.
Many health plans offer the convenience of a debit card to pay for medications, including over-the-counter medications. As part of their insurance plans, families can use HSAs, HRAs, and FSAs to purchase OTC medications to treat specific conditions.
Effective Jan, 1, 2011, under ObamaCare, OTC drugs, medicines, and biologicals will need a doctor’s prescription to be defined by the IRS as a qualified medical expense (QME) eligible for HSAs, HRAs, and FSAs reimbursement.
A major confusion under ObamaCare is that a doctor’s prescription will be needed, even if it is otherwise available without a prescription.
In addition, effective Jan. 1, 2011, the excise tax penalty for using HSA funds for ineligible medical expenses increases from 10 percent to 20 percent.
It is all very confusing. Depending upon the plan’s interpretation of the new law, the following are examples that may require a doctor's prescription in order to be an IRS eligible QME:
- Acid controllers Digestive aids
- Allergy and sinus Feminine anti-fungal and anti-itch
- Antibiotic products Hemorrhoid preps
- Anti-diarrheal Laxatives
- Anti-gas Motion sickness
- Anti-itch and insect bite Pain relief
- Anti-parasitic treatments Respiratory treatments
- Baby rash ointments and creams Sleep aids and sedatives
- Cold sore remedies Stomach remedies
Bandages, home health-aids and other OTC items may still be eligible QMEs. The following are examples of some of the items that may remain available without a physician’s prescription:
- Artificial teeth Elastic bandages and wraps
- Band-Aids® First aid supplies
- Birth control Hearing aids and batteries
- Braces and supports Insulin and diabetic supplies
- Braille books and magazines Ostomy products
- Catheters Oxygen and oxygen-equipment
- Contact lens supplies and solutions Pregnancy test kits
- Denture adhesives Reading glasses
- Diagnostic tests and monitors Wheelchairs, walkers and canes
The intended restrictions and unintended consequences of ObamaCare OTC changes are staggering:
1. Plan members, pharmacists, and the doctors will be confused by the new restrictive rules requiring a “prescription for non-prescription OTC medications.”
2. Pharmacists and checkout clerks will not be able to over-ride the debit card processing system.
3. Previously covered claims submitted for FSA and HRA reimbursements will be denied.
4. IRS audits and unexpected HSA excise tax penalties will shock taxpayers.
5. Plan members may need to go to the doctor’s office to get a prescription for the OTC medication.
6. With new exposure to liability, doctors may need to see the patient before prescribing anything.
7. Additional office visits and follow up visits may be generated.
8. To avoid calls, confusion, and assure insurance coverage physicians may begin prescribing stronger “real” prescription drugs.
9. Drug card vendors will be changing their cards to deny coverage for OTC medications.
ObamaCare OTC is a simple example of government control that will confuse and inconvenience millions of Americans. Purchasing pain relief medicines at your neighborhood pharmacy shouldn’t that complicated. After experiencing ObamaCare, getting rid of it may be the only pain relief Americans will want.
About the author:
Ronald E. Bachman FSA, MAAA, president & CEO of Healthcare Visions. Ron is chairman of the CDHC Solutions Editorial Advisory Board. To better understand health reform and the new preventive care guidelines, go to www.cdhchealthreformnavigator.net For more information on qualified medical expense see IRS bulletin 502 at http://www.irs.gov/pub/irs-pdf/p502.pdf