Grocers Want OTC Tax Repealed

The American grocery industry, represented by Food Marketing Institute (FMI) and the National Grocers Association (N.G.A.), has requested that the U.S. Congress repeal the requirement that prevents shoppers from using flexible spending accounts (FSAs) to buy over-the-counter medicines without a prescription. The provision, enacted into law as part of the Patient Protection and Affordable Care Act, will take OTC medications off the list of eligible medical expenses for reimbursement by FSAs and Health Savings Accounts (HSAs) on Jan. 1, 2011. FMI and N.G.A., along with other interested organizations, has signed a letter to the lawmakers that asks for the provision to be repealed or at least delayed.

“The supermarket industry invested considerable resources into developing a system to make it convenient for our customers to use FSA debit cards for OTC medications,” noted Leslie G. Sarasin, president and CEO of Arlington, Va.-based FMI. “Removing cough and cold medicines and other OTC products from the list of eligible nonprescription items in the FSA plan will certainly put an additional tax on our customers. Our desire is to be able to offer consumers a choice and give them access to affordable OTC treatments through their FSA so they can meet the health care needs of their families at the lowest cost possible.”

Offered by 85 percent of large employers, FSAs are designed to make everyday medical expenses more affordable. According to the industry groups, the availability of OTC medicines through an employer-backed FSA provides cost savings to consumers, boosts worker productivity and encourages better health care decisions by both employers and employees, all of which are consistent with the aims of health care reform.

“At a time when America’s middle-class families are struggling to make ends meet, the new government restrictions that require a prescription to purchase an over the counter medicine using FSA funds is counter-productive and unfairly reduces consumer’s health care benefits,” said Peter J. Larkin, the  president and CEO of Arlington-based N.G.A. “Independent retailers have invested considerable capital in technology to accept FSA funds from their customers as an important payment option. This law effectively blocks them from using this option and should be repealed.”