A flexible spending account (FSA) allows employees to use pretax salary to pay for certain medical expenses that are not covered by their health insurance. As a result of the Patient Protection and Affordable Care Act (PPACA), the FSA concept underwent a major change on Jan. 1, 2011, and will undergo another change on Jan. 1, 2013. This year, FSA plans began requiring prescriptions for all over-the-counter (OTC) medications. In 2013, FSA accounts will be capped at $2,500 annually.

Regulation Overview

For FSA purposes, the Internal Revenue Service (IRS) defines a prescription as a medication order that meets the legal requirements of a prescription in the state in which the medical expense is incurred. The prescription must be written by someone who is legally authorized to issue a prescription in that state. If a prescription for an OTC medication meets the requirements of the state in which it is filled, the medication can be eligible for FSA reimbursement. The OTC product must relieve or treat injuries or illness. This caveat bars reimbursement for any product used for cosmetic purposes or for general health.

OTC products that have more than one purpose, such as vitamins, have additional requirements. Vitamins may be reimbursable based on a letter of medical necessity (LMN) written by a healthcare provider. This letter must include the specific diagnosis or medical condition to be treated by the product and a statement that the OTC medication is needed to treat the condition. Most plans also require the employee to submit a receipt detailing the purchase of the product. Submission of an LMN does not assure that a product will be approved for reimbursement.

The prescription regulation only applies to products that contain medication. Nonmedicinal products that had been reimbursable prior to the rule change, such as bandages, hearing aids, diabetes monitoring supplies and incontinence supplies, continue to be reimbursable without a prescription.

A question-and-answer document about the OTC prescription requirement of the PPACA is available at this link: http://http://www.irs.gov/newsroom/article/0,,id=227308,00.html.

Implications for Practice

Legal and ethical concerns may arise when a patient asks a provider to write a prescription for family members who are not present at the visit. The issue of prescribing when no evidence of existing or probable disease exists is thorny. When writing a prescription, the most basic assumption is that an ongoing therapeutic relationship exists.

Should we prescribe for people who are not our patients? What is the significance of prescribing for an event that has not occurred? Exploration of this topic includes the concept of imminent probability of disease. Essentially, the expectation is that a provider will not prescribe medications unless a disease is present or is likely to occur.

In 2003, when an IRS ruling opened the door for tax-free reimbursement of OTC drugs, reimbursement was not tied to a diagnosis of a specific condition nor to a recommendation from a provider. Because no entity has updated this concept, it would be expected to carry forward with the prescribing of OTC drugs. Using these explanations to guide our practice allows for responsible prescribing in a case where disease is not present but a probability exists, such as with a cold.

Even with this general guidance, NPs and PAs must consider the effect of the medication on the patient, respecting the ethical principles of nonmaleficence (avoiding harm to patients) and beneficence (duty to do good). If the people asking for OTC prescriptions are your patients and you have examined them, the expectation is that you have educated or will educate about the use of the medications requested.

A Tough Spot

The new FSA requirement for OTC prescriptions puts healthcare providers in the position of having to make legal and ethical decisions about recommending medicines for potential health concerns. Using rudimentary principles of prescribing and reflecting on the basic ethical principles of patient care, you can determine when prescribing OTC medication for FSA purposes is appropriate.

Cherie Howk is a family nurse practitioner who is an assistant professor in the College of Nursing, Health and Human Services at Indiana State University in Terre Haute.

Components of an OTC Prescription

• Date
• Patient's name
• Name of the OTC product
• Dosage requirement (potency of the OTC product must match the prescribed amount)
• Number of refills (unless it is a one-time purchase, refills can be made for up to 1 year from the date of the prescription)
• Anything else required by the state in which the prescription is written