If you use funds you’ve set aside in a tax-advantaged health account to buy over-the-counter medications, you need to be aware of a change scheduled for next year.
Starting in 2011, over-the-counter medications, such as aspirin, flu medications, and allergy pills, cannot be purchased with funds from health savings accounts (HSAs), Archer medical savings accounts (MSAs), health flexible spending arrangements (FSAs), and health reimbursement arrangements (HRAs).
Exceptions to this new rule: insulin, certain medical devices and supplies, and over-the-counter drugs for which you have a doctor’s prescription.
With this coming change in mind, you might want to stock up on over-the-counter medications before December 31, 2010.
The 2010 health care reform law included a requirement that employers report the value of health coverage they provide to employees, beginning with W-2 forms for 2011.
The IRS has announced that it will make this reporting optional for 2011 W-2 forms in order to give employers additional time to adjust payroll systems and procedures. The IRS also reminded taxpayers that the amount reported is not taxable income to the employee; the reporting is for informational purposes only.