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Use FSA funds to stock up on OTC meds

By Kay Bell · Bankrate.com
Monday, December 27, 2010
Posted: 10 am ET

If you're anything like me, you probably got an unwanted Christmas present: a cold.

But if you have a medical flexible spending account, or FSA, your sniffles also could help you maximize your 2010 tax savings.

You put money into this workplace benefit before taxes are taken out of your check. Then you use the untaxed medical account funds to pay for treatments that aren't covered by your health insurance, such as copays and over-the-counter, or OTC, medications.

And now is the time to stock up on OTC treatments. 2010 is the last year that FSA money can be used, or at least used easily, to cover medications you buy off your grocery or neighborhood drugstore shelves.

Starting Jan. 1, 2011, you can still be reimbursed from your FSA for such purchases, but only if you get a doctor's prescription for the store-bought treatment. Yep, if your physician says all you need is some of that icky green cold syrup, ask him or her for an Rx for it so you can use your FSA funds to pay for it.

In most cases, that's not going to happen -- and that was the underlying point of the change. If you can't spend FSA funds so liberally, then you won't put as much in the account. And less nontaxed money in these accounts means more taxable money for Uncle Sam.

But there are still a few days to take advantage of the current more liberal OTC FSA rule. So if your workplace benefits year runs through Dec. 31, pick up some OTC medications this week courtesy of the tax code.

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2 Comments
Homeful
January 07, 2011 at 6:59 pm

Or, as the article stated, it is unlikely to get a prescription for most of your otc items (drugs that is... contacts and supplies are still covered) anyway so nevermind most of your argument. If you are dumb enough to go through all that to save 3 dollars then that is your own problem, not Obamas. Plus, if it is something you need and your doctor cares too little to phone it in for you, then find a new doctor, and if you dont it's once again your fault. I'm a pharmacist and people are being stupid about this. 30% or less savings on a couple for 10-20 dollar items will not break you, and if it does you did something along the way to put yourself in that position. Probably stuff like planning on going to a doctors office visit with the intention of getting a prescription for tylenol and then whining about the goverment about things you can't begin to comprehend apparently on a website.

Homeless
December 28, 2010 at 8:23 am

THIS is the STUPIDEST part of the healthcare "reform"! RIDICULOUS...let's cost taxpayers more money, by making them make an appointment with a doctor, so that the doctor can prescribe TYLENOL. HMMMM...that doesn't line the doctors' pockets a little more or the multi-billion dollar (campaign supporting) health insurance company for that matter.

So I will have to pay a co-pay/deductible/coinsurance to the doctor/insurance company, in order to buy tylenol (through my FSA) for my teething child. Glad I just spent my last $200 in my FSA to stock up for next year...hopefully it will get me through, until the republicans can repeal this disgusting bill!

THAT really keeps medical costs down...good going Obamacare.