Drug Stores Ask IRS to Delay Rules on Health Debit Card Purchases

The National Association of Chain Drug Stores has sent a letter to the Internal Revenue Service asking it to delay rules implementing provisions in the health care reform bill that would prohibit the use of debit cards, such as those used in flexible spending accounts and health reimbursement accounts, to buy over-the-counter prescribed medications.

In the letter, the NACDS stated its support for a delay longer than the IRS-proposed two-week delay if the IRS would not accept the NACDS's proposal to amend its guidance to clarify that debit cards may be used to purchase prescribed OTC medications from pharmacies.

The new rules were supposed to take effect on Jan. 1, 2011, but the IRS said in Notice 2010-59 that it would not challenge the use of FSA and HRA debit cards for OTC prescription medication expenses through Jan. 15, 2011, to give pharmacies time to make the change in their systems. After January 16, however, merchants need to substantiate that the OTC medication was prescribed before a reimbursement can be made.

The NACDS said that a longer delay of two years would help enhance the interoperability of the systems needed to distinguish between the types of prescriptions allowed under the Inventory Information Approval System.

“Currently, there is no robust interaction between pharmacy dispensing systems and IIAS systems; IIAS systems cannot distinguish between a medication for which a prescription is required and an OTC that has been prescribed,” said the letter. “To comply with the IRS guidance, pharmacy IIAS systems must be modified to distinguish between the two categories of medications, prescription-only and OTC.”

The NACDS also requested clarification on the types of prescriptions allowed under the provisions of the Patient Protection and Affordable Care Act. The letter urged the continued use of flexible spending account and health reimbursement account debit cards for OTC medication purchases where a pharmacist or pharmacy personnel validates the existence of a prescription at the point of sale.