This is the time of year known to millions of workers around the country as the fall "open enrollment" period. Only this time, an estimated 33 million workers who have medical flexible spending accounts will need to be aware of new restriction that go into effect on January 1, 2011.
If you are in this group, you are probably deciding on how much of your pre-tax salary to divert into these accounts for next year or how to spend what's left in your 2010 FSAs so you don't forfeit it under the annual "use it or lose it" rule. You may want to use what's left to buy up what ever over the counter drugs you use because next year, you can't use your FSA money for over the counter purchases.
Under new rules that were mandated by the March health reform law and go into effect Jan. 1, you can no longer use your FSA dollars to buy over-the-counter drugs, unless you have a prescription or letter of medical necessity from a doctor. The one major exception is insulin, which you can still buy with FSA dollars even in places where you get it without a prescription.
Moreover, FSA debit cards, which make it more convenient to use these accounts to pay for out-of-pocket medical expenses, will no longer work for over the counter drug items, even if you have a prescription or letter. Instead, you'll have to pay out of pocket and then submit a reimbursement claim.
During the transition period, while drugstores reprogram their computers, FSA debit cards also may not work at some stores for non-drug items, such as contact lens solution, that you can still use your FSA for in 2011. FSA debit cards should still work for prescription drugs.
Even if your employer allows you a couple of months into the new plan year to use up the last year's funds, this grace period will not apply when it comes to over the counter medication.
