Q.- Can an employee be reimbursed from his health FSA for purchasing prescription drugs online?
A.- Maybe. The drug must be procured in the United States to be eligible for reimbursement. Many internet drug companies work within a network of Canadian and International pharmacies for procurement of prescription medication, even if the drug company has a physical location in the United States.
According to IRS Information Letter 2005-0011 (Mar. 14, 2005), a health FSA cannot reimburse prescription drugs imported from Canada or other foreign countries. If the employee can provide documentation that the particular drug he purchased was procured in the United States, it can be considered for reimbursement. Otherwise, it is not eligible for reimbursement.