The new year is bringing a change to the way Health Savings Accounts (HSA’s) are treated by the IRS. Starting on January 1, 2011, the IRS will require a doctor’s prescription in order to use HSA funds for most over-the-counter medications purchased on or after January 1st.
However, some things, like insulin and diabetic supplies, will not require a prescription. This change will not impact over-the-counter purchases made in 2010, so those items will not require a doctor’s prescription.
Note that in 2011 the penalty for using an HSA for non-qualified expenses will increase from 10% to 20% of the amount spent. Please follow this link for more information on Health Savings Accounts.
Please consult with a qualified tax professional for all tax related matters.
