Help Your Employees Manage Skyrocketing Health Care Costs

E-update
September 18, 2003
Melissa Proffitt Reese, Christopher Sears, Tiffany Sharpley, Stephanie Smithey

On September 3, 2003, the Internal Revenue Service (IRS) announced that employers may provide reimbursements for everyday over the counter (OTC) medicines and drugs to employees who participate in medical reimbursement programs. The IRS determined that purchases made for non-prescription medicines are expenses for medical care. This is good news for employees, who can now save money by tracking their OTC expenses and paying for them with pre-tax dollars, although reimbursing OTC expenses will impact an employer's administrative reimbursement procedures, including the use of debit cards.

Before communicating this to your employees you should review your plan documents carefully to determine whether OTCs currently are covered under your plan. If you choose to reimburse employees for these expenses, your plan may need to be amended.

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