By Jerry Geisel
May. 30, 2012
The House Ways and Means Committee is expected to vote on and pass legislation that would overturn an unpopular provision in the health care reform law that restricts the use of flexible spending accounts and health savings accounts to reimburse employees for over-the-counter medications.
Under that provision, FSA reimbursement is permitted only if the employee obtains a prescription for the medication, while in the case of HSAs, OTC reimbursement is permitted without a prescription, but a 20 percent federal tax is imposed on the distribution.
The bill, H.R. 5842, to be considered Thursday, May 31, by the committee, would eliminate the OTC restrictions in the Patient Protection and Affordable Care Act of 2010.
The restrictions are very unpopular among employers. Sixty-two percent of employers responding to a Midwest Business Group on Health survey said they favored repeal of the provision, which made it the second most unpopular health care reform law provision among respondents. The most unpopular was the provision, effective in 2013, that will place a $2,500 annual cap on FSA contributions.
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