IMPACT ON HEALTHCARE COSTS
Used properly, OTC drugs are safe and effective for the treatment and prevention of many common diseases and can help hold down the cost of healthcare. Savings from OTC use are real, and the benefits have been clearly demonstrated in a variety of studies. For 12 ailments analyzed, every dollar spent on OTCs yielded $2.47 in healthcare value, taking into account savings versus the cost of a doctor visit, lost time from work, and the cost of prescription drugs (Kline & Company 1997). ACNielsen estimated that Americans spent over $19 billion on OTC drugs in 2000, less than two percent of the $1.3 trillion in medical costs for that year. In addition, Northwestern University concluded in 2004 that the use of OTCs in the treatment of upper respiratory infections alone saves the U.S. healthcare system and economy nearly $5 billion a year. The average American household currently spends approximately $185 on OTC medicines per year.
IMPLEMENTATION AND ENFORCEMENT
The IRS has recognized the cost savings of over-the-counter medicines in a September 2003 ruling, IRS Revenue Ruling 2003-102. The IRS held that while OTCs are not deductible under Section 213 of the IRS Code, the cost of OTC medicines qualify for reimbursement from flexible spending accounts (FSA). These accounts are offered by many employers and allow workers to set aside from each paycheck a certain amount of money to be used to pay out-of-pocket medical expenses and childcare costs. In addition, the U.S. Department of Treasury has ruled that OTC medicines also may be reimbursed from health savings accounts (HSAs) created by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003.
*Consumer Healthcare Product Association (CHPA)
www.chpa-info.org/ChpaPortal/PressRoom/PositionPapers/OTC_tax_deductibility.htm
To take advantage of these qualified OTC medicines, visit www.hsafsa.com , an online retailer offering only FSA or HSA eligible Over-The-Counter (OTC) Drugs and Home Medical Equipment to individuals who have an HDHC Health Insurance Plan with a FSA or HSA account.
Used properly, OTC drugs are safe and effective for the treatment and prevention of many common diseases and can help hold down the cost of healthcare. Savings from OTC use are real, and the benefits have been clearly demonstrated in a variety of studies. For 12 ailments analyzed, every dollar spent on OTCs yielded $2.47 in healthcare value, taking into account savings versus the cost of a doctor visit, lost time from work, and the cost of prescription drugs (Kline & Company 1997). ACNielsen estimated that Americans spent over $19 billion on OTC drugs in 2000, less than two percent of the $1.3 trillion in medical costs for that year. In addition, Northwestern University concluded in 2004 that the use of OTCs in the treatment of upper respiratory infections alone saves the U.S. healthcare system and economy nearly $5 billion a year. The average American household currently spends approximately $185 on OTC medicines per year.
IMPLEMENTATION AND ENFORCEMENT
The IRS has recognized the cost savings of over-the-counter medicines in a September 2003 ruling, IRS Revenue Ruling 2003-102. The IRS held that while OTCs are not deductible under Section 213 of the IRS Code, the cost of OTC medicines qualify for reimbursement from flexible spending accounts (FSA). These accounts are offered by many employers and allow workers to set aside from each paycheck a certain amount of money to be used to pay out-of-pocket medical expenses and childcare costs. In addition, the U.S. Department of Treasury has ruled that OTC medicines also may be reimbursed from health savings accounts (HSAs) created by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003.
*Consumer Healthcare Product Association (CHPA)
www.chpa-info.org/ChpaPortal/PressRoom/PositionPapers/OTC_tax_deductibility.htm
To take advantage of these qualified OTC medicines, visit www.hsafsa.com , an online retailer offering only FSA or HSA eligible Over-The-Counter (OTC) Drugs and Home Medical Equipment to individuals who have an HDHC Health Insurance Plan with a FSA or HSA account.
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