Flexible Spending Account Deadlines: Time To Stock Up On Over-The-Counter Medicine?

It’s that time of year again, to frantically use up any remaining balances in our Flexible Spending Accounts (FSA). This year, it may be good to stock up on over-the-counter (OTC) medications that you use regularly. (Watch out for expiration dates, but read this Harvard Medical School article first before throwing anything out.)

Effective January 1, 2011, the cost of OTC medications will no longer be payable through a FSA, unless the medication was prescribed by a doctor. If your FSA administrator allows you a certain grace period in 2011 to use leftover funds from the 2010 calendar year, the your actual purchase date must still be before 12/31 to remain eligible. The change does not affect insulin, even if purchased without a prescription, or other health care expenses such as medical devices, eye glasses, contact lenses, co-pays and deductibles. [IRS FAQ]

If you still need certain OTC drugs in 2011, you can always ask your primary doctor to write a prescription for them during your annual checkup. In addition, Target and Walmart offer 30-day supplies for $4 and 90-day supplies for $10 on many generic drugs.

Quick Ideas For Last-Minute FSA Spending

  • Advanced refill of prescriptions
  • Eye exams
  • Contact lenses and lens solution
  • Pain killers
  • Cold and flu medicines
  • First aid supplies for emergency kits
  • Condoms and other birth control items
  • Ear plugs
  • Acne medication

If you’re looking for detailed guidance on what is eligible or not, check out these handy guides from health insurer Aetna and from administrator Conexis.

Honestly, I wonder when this whole guess-how-sick-you’ll-be-this-year madness will finally end. If this is our money, why shouldn’t it just roll over every year until we use it for a valid medical expense? Health Savings Accounts have already been around for years now, we can use the existing infrastructure.


  1. I agree, flexible spending accounts (FSAs) are often more of a hassle than they’re worth. Health savings accounts (HSAs) are much better, because you roll over and keep the pre-tax money you’ve set aside in them year after year. Unfortunately, HSAs are only available if you enroll in a high-deductible health insurance plan – another gamble. Even though I anticipate a higher tax bill next year, I declined participation in my FSA when they wouldn’t let me contribute less than their $300 minimum. I can see how FSAs are valuable if you or a dependent have a chronic illness that you know you’ll have to manage, so the guaranteed tax write-off is a good deal. But for me, after overestimating my contribution this year and recently buying nearly $500 worth of contact lenses and solution, I was just like screw it.

  2. I have a standard Health Savings Account, not a flexible one, and it rolls over the funds to the next year without having to run out and figure out how to spend the remainder. Of course to have a standard HSA you have to have a high-deducible health plan…

  3. I am a pharmacist by education (but never practiced pharmacy). Whatever I learned in the pharmacy school, I apply in real life. When it comes to expiration date of the medicines, I use dry dosage forms like tablets upto 3 years after expiration, capsules 1 year after expiration, liquid dosage forms, I discard almost after 6 months of opening the bottle. And of course, this also depends on the medications that these dosage forms contain. The main question here is, how a layman would understand which medicine to use and which one not?

    Honestly, I am shocked at the article you site from Harvard Medical School.

  4. Be careful buying too much of the OTC items. I’ve read a couple of places where the IRS has disallowed some expenditures because the taxpayer bought an unusually large amount trying to stock up at the last minute. A few months worth of stuff will probably fly, but I wouldn’t go out and buy 10 bottles of cough syrup.

  5. always found the FSA to be interesting for reasons you concluded on. i prefer the HSA.

    that said, keep an eye out for expiration dates!

  6. What a stupid article from Harvard Medical School. Essentially, they are saying, “expiration dates don’t mean squat, but you are on your own if you want to take them!”.

    Yeah, thank you very much!!!

  7. So, is HSA still OK to buy OTC after new year?

  8. I think it is really weird for the rules to be changing in the middle of the FSA plan year. Our FSA plan was set in May based on usage of OTC for the entire plan year, now we’re stuck with too much in there to be able to effectively use up by the end of the calendar year.

  9. Another way to spend last minute FSA is getting updates on vaccines, especially if you are planning a trip in 2011.

  10. Another thing that’s not mentioned…use mail-order pharmacies to stock up on the next 3 months of any recurring prescriptions (meds for allergy, birth control, blood pressure etc.)

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