The IRS has issued guidance on statutory changes concerning the use of certain tax-favored arrangements, such as flexible spending accounts (FSAs), to pay for over-the-counter medicines.

The Affordable Care Act, enacted in March, established a new uniform standard that applies to FSAs and health reimbursement accounts (HRAs). The standard is effective Jan. 1, 2011.

Under the new standard, the cost of an over-the-counter medicine or drug cannot be reimbursed from the account unless a prescription is obtained. The change does not affect insulin, even if purchased without a prescription, or other health care expenses such as medical devices, eye glasses, contact lenses, co-pays, or deductibles.

The new standard applies only to purchases made on or after January 1, 2011, so claims for medicines or drugs purchased without a prescription in 2010 can still be reimbursed in 2011, if allowed by the employer's plan.

A similar rule goes into effect on Jan. 1, 2011, for Health Savings Accounts and Archer Medical Savings Accounts.

For details on current rules:

For updates on this and other health care reform provisions:,,id=220809,00.html.