House panel approves bill restoring use of FSAs, HSAs to pay for OTC drugs

Employees again would be able to tap their flexible spending accounts, health savings accounts and health reimbursement arrangements to pay for over-the-counter medications without a doctor's prescription under legislation approved Thursday by the House Ways and Means Committee.

This legislation, H.R. 1270, earlier introduced by Reps. Lynn Jenkins, R-Kan., and Ron Johnson, R-Wis., and approved by the panel on a voice vote, would reverse a provision in the Patient Protection and Affordable Care Act, effective in 2011, that stripped away employees' ability to use their FSAs, HSAs and HRAs to pay for over-the-counter medications, except for insulin.

This legislation “will help so many families across the country,” said Rep. Erik Paulsen, R-Minn., just prior to the committee's vote, referring to the restoration of the tax break.

On the other hand, restoring the tax break would only be “fair if everyone is treated the same,” said Rep. Xavier Becerra, D-Calif., referring to individuals not covered by FSAs, HSAs or HRAs, who would continue to pay for OTC medications with after-tax dollars.