Flexible Spending Account Limits

IMPACT ON THE cost of health

Used correctly, OTC medicines are safe and effective for the treatment and prevention of many common illnesses and can help contain health care costs. On the savings from the use of OTC are real, and the benefits have been clearly demonstrated in a series of studies. For 12 diseases analyzed, each dollar spent on prescription drugs has reached $ 2.47 in the value of health care, taking account of savings over the cost of a doctor visit, the time lost work, and the cost of prescription drugs (Kline & Company, 1997). ACNielsen found that Americans spent more than $ 19 billion in prescription drugs in 2000, less than two percent of the 1.3 trillion dollars in medical expenses for this year. In addition, Northwestern University in 2004 concluded that the use of prescription drugs in the treatment of upper respiratory infections alone saves the U.S. health care system and economy nearly five billion dollars annually. The average American household currently spends about $ 185 on prescription drugs per year.

Enforcement and compliance

The IRS has recognized the cost savings on prescription drugs in September 1, 2003 ruling, IRS Revenue Decision 2003-102. The IRS concluded that while prescription drugs are not deductible under section 213 of the IRS Code, the cost of OTC drugs are reimbursable from flexible spending accounts (FSA). These accounts are offered by many employers and allow employees to set aside each paycheck a certain amount of money to be used to pay out of pocket medical expenses and childcare expenses. In addition, the U.S. Treasury Department ruled that prescription drugs can be reimbursed from health savings accounts (HSAs) created by the Medicare Prescription Drug, Improvement and Modernization Act of 2003.

* Association of Consumer Health Care (APHC)

www.chpa-info.org/ChpaPortal/PressRoom/PositionPapers/OTC_tax_deductibility.htm

To take advantage of these OTC medicines qualified www.hsafsa.com visit, an offer only online retailer FSA or HSA eligible Over-the-counter (OTC) drugs and cons of Home Medical Equipment for people who have a HDHC scheme insurance with an FSA or HSA account.