Code Section 220
| Code Section | Effective Date | Name of Act | Name of Provision | 10yr Revenue Estimate ($millions) |
|---|---|---|---|---|
| 105, 106, 220 and 223 | 12/31/2010 | Patient Protection and Affordable Care Act | Distributions for Medicine Qualified Only if for Prescribed Drug or Insulin | 5,000 |
| 220 and 223 | 12/31/2010 | Patient Protection and Affordable Care Act | Increase in Additional Tax on Distributions from HSAs Not Used for Medical Expenses | 1,400 |
Distributions for Medicine Qualified Only if for PrescribedDrug or Insulin
Explanation of Provision
Under the provision, with respect to medicines, the definition of medical expense for purposes of employer-provided health coverage (including HRAs and Health FSAs), HSAs, and Archer MSAs, is conformed to the definition for purposes of the itemized deduction for medical expenses, except that prescribed drug is determined without regard to whether the drug is available without a prescription. Thus, under the provision, the cost of over-the-counter medicines may not be reimbursed with excludible income through a Health FSA, HRA, HSA, or Archer MSA, unless the medicine is prescribed by a physician.
Increase in Additional Tax on Distributions from HSAs Not Used for Medical Expenses
Explanation of Provision
The additional tax on distributions from an HSA or an ArcherMSA that are not used for qualified medical expenses is increased to 20 percent of the disbursed amount.
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