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OTC Drugs After the CARES Act
The Coronavirus Aid, Relief, and Economic Security (CARES) Act made significant changes to HSA and FSA rules in 2020. Over-the-counter medications and menstrual products are now eligible expenses without a prescription.
What Changed?
Before 2020, you needed a prescription to use HSA/FSA funds for over-the-counter medications. The CARES Act eliminated this requirement.
Menstrual care products (pads, tampons, liners, cups) are now qualified medical expenses without any prescription or documentation.
These changes are permanent, not temporary COVID-19 relief measures. The new rules apply to expenses incurred after December 31, 2019.
Before vs. After CARES Act
OTC Drugs
Required a prescription from your doctor to be eligible
Menstrual Products
Not considered qualified medical expenses at all
Added Hassle
Doctor visits just to get prescriptions for common items like Tylenol or Claritin
OTC Drugs
No prescription required - buy directly and use HSA/FSA funds
Menstrual Products
Fully eligible as qualified medical expenses
Easier Access
Simply save your receipt and use your HSA/FSA card at checkout
Now Eligible: OTC Categories
Here are common over-the-counter items you can now purchase with your HSA, FSA, or HRA without a prescription. This is not an exhaustive list.
Still Not Eligible (Without LMN)
While the CARES Act expanded eligibility significantly, some items still require documentation or are simply not qualified medical expenses.
Not considered medical treatment unless prescribed for a specific diagnosed condition.
May be eligible with a Letter of Medical Necessity (LMN) from your doctor.
Lotions, moisturizers, and cosmetics are not qualified medical expenses.
General hygiene items are not qualified, even if they promote health.
While temporarily expanded during COVID-19, general hand sanitizer may not be eligible. Check your plan.
How to Use Your HSA/FSA for OTC Items
- 1
Shop for Eligible Items
Look for OTC drugs and menstrual products. Many retailers label eligible items with HSA/FSA badges.
- 2
Pay with Your HSA/FSA Card
Use your HSA/FSA debit card at checkout, just like a regular debit card. The transaction is automatic.
- 3
Save Your Receipt
Keep the itemized receipt for your records. You may need it for substantiation if your plan administrator or the IRS requests documentation.
- 4
Reimbursement (if you paid out-of-pocket)
If you paid with cash or a regular credit card, you can submit a claim to your HSA/FSA administrator for reimbursement. Include the itemized receipt.
Important Dates & Timeline
March 27, 2020 - CARES Act Signed into Law
President signed the Coronavirus Aid, Relief, and Economic Security Act, which included HSA/FSA rule changes.
Effective Date: January 1, 2020 (Retroactive)
The changes apply to expenses incurred on or after January 1, 2020. You can claim reimbursement for eligible OTC items purchased after this date, even if you bought them before the CARES Act was signed.
Permanent Change
Unlike some temporary COVID-19 relief measures, this change is permanent. OTC drugs and menstrual products remain eligible indefinitely under current law.
Official IRS Guidance
Official IRS summary of CARES Act provisions, including HSA/FSA changes.
Medical and Dental Expenses - Updated to reflect CARES Act changes for OTC drugs and menstrual products.
The full text of the CARES Act legislation from Congress.gov.