Most large employers are adding over-the-counter drugs to healthcare flexible spending accounts after a recent favorable decision by the Internal Revenue Service, according to a survey from the Washington Business Group on Health.
Seventy of the 72 large companies surveyed have decided to cover OTC drugs under their FSAs, the group said today.
More than half of the responding companies will begin coverage in January, but about 15% made coverage retroactive to an earlier date, such as January or September of this year, the group added.
On Sept. 2, the IRS issued a guidance clarifying that reimbursements for nonprescription drugs under FSAs and other employer health plans are excluded from income.
In related news, California regulators in March cautioned health plans against terminating coverage of entire classes of prescription medications when a drug in a class switches from prescription to OTC status.
In particular, a bulletin by the California Department of Managed Health Care advised plans against stopping coverage of nonsedating antihistamines such as Clarinex, Allegra and Zyrtec.
Last year, Claritin, a blockbuster antihistamine made by Schering-Plough Corp., switched to OTC, costing a fraction of its former price.