Over-the-counter medicines play an important role in the health status of millions of Americans by saving U.S. consumers an average of $20 billion per year in health care costs—taking into account prescription costs, doctor visits, lost time from work, insurance costs, and travel. In order to support consumers' access to these cost-savings, CHPA is a strong advocate for favorable tax treatment for over-the-counter medicines.
Flexible spending and health savings accounts are valuable programs offered by many employers to help consumers save money. They work by allowing employees to put aside pre-tax dollars in order to pay for health-related items throughout the year. Under U.S. Internal Revenue Service (IRS) guidelines, most OTC medicines are reimburseable under employer-sponsored flexible spending accounts. CHPA is working to expand the IRS guidelines to ensure that dental products are also eligible for reimbursement.
On September 22, 2003, the IRS issued a revenue ruling making OTCs reimbursable from healthcare flexible spending accounts (FSAs). This step will provide real cost savings for millions of consumers who have FSAs and recognizes the importance of OTCs in the U.S. healthcare system.
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