Human Resources News & Insights

Push growing to end reform’s OTC rule

A cost-analysis by the Consumer Healthcare Products Association found 50 million unnecessary visits to doctors could be eliminated and billions saved if the health reform law’s over-the-counter (OTC) drug restrictions were lifted.

Because of the new restrictions in the Patient Protection and Affordable Care Act, as of Jan. 1, 2011, expenses for OTC drugs that aren’t prescribed by a doctor (except insulin) can’t be reimbursed using funds from these plans:

  • Flexible spending arrangements (FSAs)
  • Health reimbursement arrangements (HRAs)
  • Health savings accounts (HSAs), and
  • Archer medical savings accounts (MSAs).

Critics say the new restrictions will result in a dramatic increase in the amount of patients seeking prescriptions for medicines already available over the counter, which in turn will drive up healthcare costs by increasing office visits.

As a result, there’s even been a major push in Congress to get those OTC restrictions thrown out. Six pieces of legislation have already been introduced between the House and Senate, which would repeal the reform law’s OTC rules.

Some of the bills would have even larger implications for consumer-directed healthcare accounts.


  • The Patients’ Freedom to Choose Act — which has been introduced in the House and has 119 cosponsors — would repeal the restrictions on OTC medications and the planned $2,500 cap on FSA contributions.
  • The Family and Retirement Health Investment Act of 2011 — which has 40 cosponsors in the House — would repeal the OTC restrictions, expand the use of FSAs and HSAs for healthcare retainer fees and Medicare hospital plan beneficiaries, and allow a rollover of $500 in FSAs.

We’ll keep you posted on the progress of these bills.

Info: For more on the pending legislation, visit this breakdown by Jody Dietel, executive director of Save Flexible Spending Plans.

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  • Deborah Bartolacci

    Oh my, just one more “give me give me”. Why not just say we want it for free! If people are going to go to the doctor, they’re going to go to the doctor. I can’t imagine that just because an over the counter item will not longer be covered under these plans that we will see an increase in doctor visits. Why should they be covered? These are items that we generally buy anyway, come on these plans were originally for medical expenses, not over the counter items. Why must we always try to please everyone all the time!

  • I’m not sure Deborah understands the proposed changes or the need for them. The plans mentioned, under the exisiting law, are spending plans either paid for by the employee, by the employer, or a combination of both. They are not insurance plans. With the existing law, an employee, wanting to use their spending account, would need to go to the doctor to get a prescription for the OTC or in many cases a more expensive prescription substitute; both costing the insurance plan more money. Many of the prescriptions that have gone OTC, such as prevacid, clariton, etc. save the insurance plan and the employee money because they don’t have to make unnecessary trips to the doctor. The existing law drives up the cost of insurance for everyone. As someone who manages a $4 million dollar self-insured plan, I can tell you that by prohibiting the use of flex-spending accounts, health savings accounts, health reimbursement accounts for OTC without a prescription is costly for everyone. Reversing this law would be good for the employer and the employee.

  • Common Sense

    These new restrictions in the Patient Protection and Affordable Care Act for otc’s were added as a way to sell Obamacare. Unfortunately the Democrats who stuck this in the bill had to be willfully blind or negligantly ignorant to the unintended consequences. Any fool could see that this rule would drive up costs and unnecessary doctor visits. (wasn’t the bill suppose to drive down costs). It is just reason #232 Obamacare should not have been forced down our collective throats.