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The IRS has changed the definition of "dependent" for purposes of Tax Free Health Coverage. Effective March 30, 2010, health care reform expanded the definition of "dependent" for purposes of tax free health coverage to include a "child" who will not yet turn age 27 during the year, regardless of whether the child otherwise qualifies as a tax dependent. See IRS Notice 2010-38. A fact sheet is available at: www.dol.gov/ebsa/newsroom/fsdependentcoverage.html FAQs are available at www.dol.gov/ebsa/faqs/faq-dependentcoverage.html.
The Health Care Reform Bill will impact Section 125 Plans effective for tax years beginning January 1, 2011. As of January 1, 2011, a Medical Flexible Spending Account (FSA), a Health Reimbursement Arrangement (HRA), and/or a Health Savings Account (HSA) will no longer be able to reimburse expenses incurred as over the counter (OTC) medicines or drugs unless the medicine or drug is "prescribed" (regardless of whether a prescription is required to obtain them). This requirement does not apply to eligible OTC medical items other than medicines or drugs (e.g. bandages, etc.). This limitation takes effect January 1, 2011 without regard to the Plan Year of the HRA or FSA. A Medical FSA election will not be able to be changed during the Plan Year because of this bill. |
Flexible Spending Account (FSA)
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