Impact on FSAs, HSAs, and HRAs

Frequently Asked Questions (FAQ)

What items are reimbursable without a prescription under my medical FSA?

Over-the-counter medicines and drugs, such as cough and cold medicine, pain relief treatment, and allergy and sinus medication, will require a prescription from a medical professional to be covered. Other items not considered a drug or medicine, such as bandages, contact lens solution, and crutches, will remain eligible for reimbursement without a prescription.

When referring to non-reimbursed plans for HSA accounts, does the HSA not pay for over-the-counter medications as of next year?

As of January 1, 2011, over-the-counter medicines or drugs (other than insulin) will no longer be eligible under a health FSA, HSA, or HRA unless they were prescribed by a medical practitioner. This would include expenses such as aspirin, over-the-counter cold or allergy medicine, or cough suppressants. It is important to stress that they are still eligible; however, participants need a prescription to accompany the purchase of these items.

Can the medical FSA cap be set at less than $2,500?

Medical FSAs will be capped at $2,500 beginning in 2013 and indexed for inflation thereafter. Employers must observe the cap; however, the maximum can be set at less than $2,500. This must be outlined in the plan documentation.

If an employer fully funds a health retirement account (HRA) and makes no contribution toward employee group insurance premiums, does the contribution to the HRA qualify the employer for the small business tax credit?

No, HRA employer contributions are not eligible for the small business tax credit.

Paychex Insurance Agency Can Help

Paychex Insurance Agency is a full-service organization that has taken a leadership role in transforming how businesses like yours adapt to and benefit from the rapidly changing insurance industry. We're ready to offer information and assistance to help you navigate the recent Health Care Reform initiatives.

Health Care Reform Updates

With access to legislative and regulatory specialists in Washington, D.C. and expert, in-house sources of legal and compliance guidance, Paychex Insurance Agency is your source for Health Care Reform knowledge, tools, and resources.

Whether you're looking for a Business Owner Policy, Workers' Compensation insurance or group health and life insurance, Paychex Insurance Agency offers flexible, scalable insurance solutions for you, your business and your employees. To learn more about how we can meet your insurance needs, call 877-393-8868 or have an agent call you.

The Department of Health and Human Services and the Internal Revenue Service (IRS) continue to provide specifics and guidance on the Health Care Reform Act. Paychex will monitor these regulatory developments and provide updates as appropriate.

The information in these materials should not be considered legal or accounting advice, and it should not substitute for legal, accounting, and other professional advice where the facts and circumstances warrant. It is provided for informational purposes only. If you require legal or accounting advice, or need other professional assistance, you should always consult your licensed attorney, accountant, or other federally licensed tax professional to discuss your particular facts, circumstances, and business needs.

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