Skip to content Menu

OTC Medications Reimbursable by Flex Plans

11/20/2003

Employers may reimburse employees for the cost of nonprescription, over-the-counter medications through flexible spending accounts under a new ruling by the Internal Revenue Service. Revenue Ruling 2003-102 provides that such reimbursements will be eligible for tax-free treatment if properly substantiated.

In announcing the ruling, Treasury Secretary John Snow said, "Flexible Spending Accounts are an important tool in helping people meet their health care costs. Since many prescription drugs have moved to the over-the-counter market, this action today makes paying for them a little bit easier to swallow."

The ruling explains that the statutory exclusion for reimbursements of employee health reimbursements is broader than the limitations for the itemized deduction for medical expenses, which does not include nonprescription drugs.

Related Content

Members Only

Characterizing Student Athletes as Employees: It’s Complicated

Alexander Reid, partner at the law firm BakerHostetler, discusses issues raised by a memo from the National Labor Relations Board General Counsel, which proposed to classify some college athletes as employees.

Labor Department Proposes Substantial Expansion of Overtime Threshold

The threshold would increase by nearly 55 percent. We welcome your feedback as we prepare comments to the DOL.

Treasury and IRS Propose Guidance on IRA Prevailing Wage and Apprenticeship Rules

For organizations and institutions interested in claiming bonus amounts of federal tax benefits for clean energy and green building projects under the Inflation Reduction Act, the Treasury Department and the IRS have proposed regulations detailing the requirements, correction processes, and penalties related to the wage and apprenticeship provisions in the act.