OTC costs for specific medical condition

You have either misread or have confused not being able to deduct over the counter (OTC) medicines with the ability to get reimbursed under an employer flexible spending account.

The items you mention are not deductible. However, they are eligible medical expenses for getting reimbursed by an employer plan as long as they are either used primarily for medical care or you have a letter from your physician citing the specific medical condition being treated and indicating that the OTC drug or medication will treat or alleviate it.

It's not IRS policy, it's the law. If you can get it without a prescription it's not deductible, even if a doctor orders it.

Since I'm on SSDI and not working, I don't have any employer plan to cover these. Not that my opinion is going to matter, but this policy doesn't seem fair to those of us paying a lot of money for disease related products who don't have these FSAs.

jo

"jo" wrote

Tax laws (and other laws as well) are not fair to everyone in every concievable situation, and they never will be.

Laws come into being to create a certain type of behavior from a certain group of people. They often times enact these laws without regard or consideration of the impact to other groups, or the actual or perceived inequities of other people not similarly situated. At other times they know the implications to other groups and they make certain that there ~is~ an inequity there.

In your case you don't have an employer, in others their employer might not offer that type of plan. The goal of the lawmakers was to encourage employers to offer these types of plans. To create the incentive they had to sweeten the pot by offering something that people ~not~ in that type of plan couldn't get - namely a pre-tax deduction for certain OTC meds and supplies.

I get the point. Still P. O'd. Like suppose I had some disease for which aspirin or some such product, in copious quantities, was a life saving/sustaining treatment. This is a rhetorical scenario, but you understand my position. Wish there was some blanket policy for ANYTHING that was prescribed for a disease state. If there's going to be a Schedule A deduction for medical costs, let's make it comprehensive. Obviously there are fraud and interpretation issues that would have to be addressed, but our current system is ridiculous.

[...]

Not trying to stray too far off topic, but I'm not clear on how allowing this one special medical benefit under an FSA is an incentive for the

*employer*. In fact, doesn't it tend to reduce forfeited amounts at the end of the year, to the employer's detriment?

It looks to me more like an incentive to the *individual* to be an employee rather than gaining income in some other way, which historically has been the case ever since World War II, right?

Or to put another way, what scenario could one outline to an employer to show they are better off adding this feature to the FSA they offer, if any? (What I don't know is, did the law require *every* Sec. 121 plan to include this feature, when it was first introduced?)

-Mark Bole

Mark Bole wrote: [snip]

Rev. Ruling 2003-102 created the carve out for nonprescription drugs reimbursed under a cafeteria or flexible spending plan. Basically, it stated that Sec. 105 did not require that the reimbursable medical expense also be a medical deduction under Sec. 212. There is no requirement one way or the other that an employer include this element in the plan.

Also see Rev. Ruling 2003-58.