The Patient Protection and Affordable Care Act (PPACA) included a provision that restricts the medicines and drugs that may be reimbursed as medical expenses under health flexible spending accounts ("FSA"), health reimbursement accounts ("HRA"), health savings accounts ("HSA") or Archer medical savings accounts ("MSA"). The new law provides that effective January 1, 2011, medicines and drugs may only be reimbursed on a pretax basis if: (i) the medicine or drug requires a prescription, (ii) the individual obtains a prescription for an over-the-counter medicine or drug, or (iii) the drug is insulin. Prior to PPACA, over-the-counter drugs and medicines were reimbursable without a prescription.

The Internal Revenue Service has issued a notice that gives plan sponsors until June 30, 2011 to amend their plan retroactively for the new provision which became effective January 1, 2011.