Save More On Drugs

By Barbara Kiviat

At a time when companies are increasingly shifting health-care costs to workers, the IRS is sweetening a tax-advantaged way for employees to pay out-of-pocket expenses. Last month the agency ruled that flexible-spending accounts, or FSAs, can be used to pay for over-the-counter drugs like cough syrup and pain relievers, in addition to long-accepted items like copayments, prescriptions and glasses. FSAs let people contribute and spend pretax dollars. Any unused money in the account at year's end reverts to the employer, but the number of spending options is growing. Most companies will change plan rules for 2004 and allow folks to load up on everything from antacids to bandages, says Jon Kessler, CEO of benefits administrator WageWorks. If you don't have an FSA, act fast. Enrollment typically runs for just a few weeks from October through December. --By Barbara Kiviat