Feb. 15, 2011

PPACA Changes to Consumer-Driven Healthcare Accounts

The Patient Protection and Affordable Care Act (PPACA) includes provisions that will affect Health Savings Accounts (HSA), Health Reimbursement Arrangements (HRA) and Flexible Spending Accounts (FSA).The IRS recently provided updates on the provisions that affect the allowable medical expenses for consumer-driven healthcare accounts. Health FSA and HRA debit cards cannot be used for purchasing over the counter (OTC) medicines or drugs after Jan. 1, 2011. This rule does not apply to insulin, which can be purchased without a prescription.

The regulations specify that all OTC medicine and drug purchases made after Jan. 1, 2011, will require proof that they were prescribed before being reimbursed with an HRA or Health FSA. Such proof may include:

  • Receipts that include the name of the person who was prescribed the medicine or drug, the date, cost of purchase, and the prescription number
  • For receipts without the prescription number included, receipts must be attached to a copy of the prescription

Debit cards can be still be used for other medical expenses other than OTC medicines or drugs. The prescription requirement does not apply to those items that are not medicines or drugs, such as crutches, bandages, diagnostic devices (i.e., blood sugar test kits), or personal care items that qualify as medical expenses.

The following categories of items are some of those which will require a doctor's prescription in order to be an eligible expense:

  • Acid controllers
  • Acne medications
  • Allergy and sinus
  • Antibiotic products
  • Antifungal (foot)
  • Antiparasitic treatments
  • Antiseptics and wound cleansers
  • Anti-diarrheals
  • Anti-gas
  • Anti-itch and insect bite
  • Baby rash ointments and creams
  • Baby teething pain
  • Cold sore remedies
  • Contraceptives
  • Cough, cold and flu
  • Denture pain relief
  • Digestive aids
  • Ear care
  • Eye care
  • Feminine antifungal and anti-itch
  • Fiber laxatives (bulk forming)
  • First aid burn remedies
  • Foot care treatment
  • Hemorrhoid preps
  • Homeopathic remedies
  • Incontinence protection and treatment products
  • Laxatives (non-fiber)
  • Medicated nasal sprays, drops, and inhalers
  • Medicated respiratory treatments and vapor products
  • Motion sickness
  • Oral remedies or treatments
  • Pain relief (includes aspirin)
  • Skin treatments
  • Sleep aids and sedatives
  • Smoking deterrents
  • Stomach remedies
  • Unmedicated nasal sprays, drops and inhalers
  • Unmedicated vapor products


For more information, see the FAQ on IRS.gov. For a full list of eligible expenses, see IRS publication 502.

The information on this website is based on BCBSLA’s review of the national healthcare reform legislation and is not intended to impart legal advice. Interpretations of the reform legislation vary, and efforts will be made to present and update accurate information. This overview is intended as an educational tool only and does not replace a more rigorous review of the law's applicability to individual circumstances and attendant legal counsel and should not be relied upon as legal or compliance advice. Analysis is ongoing and additional guidance is also anticipated from the Department of Health and Human Services. Additionally, some reform regulations may differ for particular members enrolled in certain programs such as the Federal Employee Program, and those members are encouraged to consult with their benefit administrators for specific details.