This information came from an article on page 1 of the Nov. 2003 issue of Tax Hotline. It is paraphrased, we have not checked it independently, and we take no responsibility; we merely thought it might be interesting.
Over-The-Counter drugs can now be paid for thru health care Flexible Spending Accounts. I'm guessing (no guarantee) that this applies not only to FSA's but also to cafeteria plans, MSA's, HRA's, and any other kind of medical reimbursement plan established by an employer (including employee leasing firms, umbrellas, and some of our companies), and also on Schedule A to the extent over 7.5% of AGI. Naturally, I recommend confirming this with a professional. Remember that self-employed (and 2% shareholders of S corp's) can't use these plans and must resort to Schedule A if they don't have a friendly employer available as above.Apparently this was prompted by many prescription drugs becoming available without prescription, which was good for some people but bad for those who could no longer get their health insurance to cover expensive drugs that went OTC. Maybe this change will encourage some insurers to begin covering them too - although I won't hold my breath.
I had read years ago that one could write off OTC drugs if your doctor prescribed them (even though a prescription wouldn't be necessary except to document the tax deduction). Now it's probably no longer necessary to do this.