Vision Payroll

September 3, 2010

Question of the Week: How Does Health Care Reform Affect Reimbursements for Over-the Counter Medicines in FSAs?

Over-the-Counter Medicines Generally Are No Longer Reimbursable
Over-the-Counter Medicines Generally Are No Longer Reimbursable
This week’s question comes from Eric, an HR manager. I know there are changes to flexible spending arrangements (FSAs) because of health care reform. How does health care reform affect reimbursements for over-the-counter medicines in FSAs? Answer: The Patient Protection and Affordable Care Act (PPACA) made changes to reimbursements for over-the-counter medicines in the following types of accounts:

  • Flexible Spending Arrangements (FSAs),
  • Health Reimbursement Arrangements (HRAs),
  • Health Savings Accounts (HSAs), and
  • Archer Medical Savings Accounts (Archer MSAs).

Over-the-Counter Medicines Generally Are No Longer Reimbursable

Generally, the cost of an over-the-counter medicine or drug cannot be reimbursed from the account unless a prescription is obtained. The change does not affect insulin, even if purchased without a prescription, or other health care expenses such as medical devices, eyeglasses, contact lenses, co-pays and deductibles.

Change Is Effective for 2011

The new standard applies only to purchases made on or after Jan. 1, 2011, so claims for medicines or drugs purchased without a prescription in 2010 can still be reimbursed in 2011, if allowed by the employer’s plan.

IRS Provides Guidance on New Rules

The Internal Revenue Service (IRS) recently released Notice 2010-59 to provide guidance to employers and employees on the impact of PPACA and how it revises the definition of medical expenses as it relates to over-the-counter drugs.

Rev. Rul. 2003-102 Obsoleted

In conjunction with this change, the IRS also released Rev. Rul. 2010-23, which obsoletes Rev. Rul. 2003-102. This ruling provided guidance on employer reimbursements of amounts paid by an employee to purchase nonprescription medicines or drugs.

Employees Need to Plan for Changes When Making 2011 Elections

Vision Payroll recommends employees start to plan now to account for the impact of these changes on how they will make their elections under these types of plans.

November 5, 2008

Tip of the Week: Visit VisionPayroll.com for 2009 Facts and Figures

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Are you ready to make a higher contribution to your retirement plan in 2009? Did your company establish an HSA and you’re not sure how much you can put away? Do you need to know the maximum Social Security tax that can be withheld? The election results are in and so are most of the 2009 inflation adjustments for payroll facts and figures. We’ve collected what you’ll need and added them to our 2007 and 2008 presentation and now you can get them all in one place. Click Tutorials, then Important Facts and Figures. We’ll update them as needed so you can always visit VisionPayroll.com when you need the latest results.

September 17, 2008

Tip of the Week: HSAs Can Provide Tax Savings and Cost Reduction

The Treasury Department and the Small Business Administration recently announced a new website to provide information on how a Health Savings Account (HSA) can help businesses meet their employees’ health insurance needs. The new website gives an overview of HSAs, their advantages and disadvantages, a FAQ section, a comparison among different types of plans, and resources for more information. It will also be updated on a regular basis with news and official information concerning HSAs. President Bush recently participated in a roundtable discussion on HSAs with small business leaders in Oklahoma City. Vision Payroll can work with you and your benefits broker to determine if an HSA is right for you and, if so, to ensure that your HSA is properly established. Vision Payroll will also ensure that your deductions are properly calculated and reported for federal and state tax purposes. Don’t wait to be the last business on your block with an HSA—contact Vision Payroll today to get started.

July 12, 2008

IRS Issues Guidance on Health Savings Accounts

Filed under: News — Tags: , , , , , — Vision @ 1:46 pm

The IRS recently issued Notice 2008-59 on Health Savings Accounts (HSA), which are available to taxpayers enrolled in a High Deductible Health Plan. Qualified contributions to an HSA are not subject to federal income tax and distributions from an HSA for qualified medical expenses may also be made tax-free. The guidance is in the form of 42 questions and answers and the topics covered are: Eligible Individuals, High Deductible Health Plans, Contributions, Distributions, Prohibited Transactions, Establishing an HSA, and Administration. Vision Payroll can work with you and your benefits broker to determine if an HSA is right for you and, if so, to ensure that your HSA is properly established. Vision Payroll will also ensure that your deductions are properly calculated and reported for federal and state tax purposes. An HSA can be a cost-effective alternative to traditional health plans—shouldn’t you find out more today?

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