Can I Withdraw Money From My OTC Card?
Can you withdraw cash from your OTC card? Discover its primary purpose for health-related purchases and key usage limitations.
An Over-the-Counter (OTC) card is a specialized prepaid debit card provided by certain health insurance plans, most commonly Medicare Advantage plans. This card serves as a benefit designed to help members cover specific health-related expenses. Its primary purpose is to make health and wellness products more accessible, thereby reducing out-of-pocket costs for beneficiaries.
Understanding OTC Card Benefits
An OTC card functions as a pre-loaded debit card, allowing health plan members to purchase eligible health and wellness products directly from participating retailers. These cards ease the financial burden of obtaining health necessities. Health plans issue these cards to help members afford non-prescription items. Funds are loaded periodically, such as monthly or quarterly, for use within a set benefit period.
Cash Withdrawal Limitations
OTC cards are not designed for cash withdrawals and cannot be used at automated teller machines (ATMs) or for cash-back transactions at the point of sale. This limitation stems from their nature as restricted benefit cards, intended for specific, eligible health and wellness purchases. Unlike a standard debit card, the funds on an OTC card are tied to a defined category of health-related spending. This structure aligns with Internal Revenue Service (IRS) regulations governing qualified medical expenses, similar to those for Flexible Spending Accounts (FSAs) or Health Reimbursement Arrangements (HRAs). IRS guidance emphasizes that transactions must be substantiated for eligible medical care, not general cash access.
Using Your OTC Card for Purchases
Despite restrictions on cash withdrawals, OTC cards provide a practical way to acquire eligible health items. These cards can be used at approved retailers, functioning similarly to a debit card where you swipe the card and may select ‘credit’ or ‘debit’ if prompted. A Personal Identification Number (PIN) is rarely required. Common eligible items include over-the-counter medications like pain relievers and cold remedies, first aid supplies, dental hygiene products, and certain vitamins and supplements. Some plans may also cover specific healthy foods or personal care items.
To ensure a smooth purchase, check the card balance before shopping through the health plan’s website or a dedicated member portal. Health plans provide information on participating stores and a catalog of eligible items, sometimes offering tools to scan product barcodes to confirm eligibility.