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New health care legislation affects flexible spending accounts

With all the new health care legislation passed this year, many are wondering how flexible spending accounts will be affected.

By Mark Roberts | Updated on September 23, 2010

With all the new health care legislation passed this year, many are wondering how flexible spending accounts will be affected. According to AlanHaft.com, the new health care reform legislation impacts flexible FSAs in the way over-the-counter medications are handled and increases taxes on nonqualified distributions.

Beginning in 2011, FSAs cannot make reimbursements for the cost of over-the-counter medications, such as nonprescription pain relievers, cold medicines, antacids and allergy medications. However, insulin and over-the-counter medications prescribed by a physician will still be reimbursable on a tax-favored basis by these plans. You may want to stock up on your over-the-counter drugs to take advantage of the available reimbursement before the end of this year.

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