The Internal Revenue Service and U.S. Departments of Health and Human Services and Labor recently issued guidance on the Affordable Care Act employer mandate and market reforms. Notice 2015-87 contains 26 FAQs that clarify the application of market reforms to health reimbursement arrangements and employer payment plans and the affordability of employer-sponsored health coverage, among other topics.
The Internal Revenue Service has recently released the latest versions of its Publications 502 and 503. Publication 502 is a list of medical and dental expenses (including the Health Coverage Tax Credit) that are deductible by taxpayers on their 2013 federal income tax returns, while Publication 503 is a list of child and dependent care expenses for use in preparing a taxpayer’s 2013 return. These publications are also useful in the administration of health and dependent care flexible spending accounts, as well as health savings accounts and health reimbursement accounts.
Links to these publications are below—
Publication 502 https://www.irs.gov/pub/irs-prior/p502–2013.pdf
Publication 503 https://www.irs.gov/pub/irs-prior/p503–2013.pdf
With the fiscal cliff approaching in 2013, several favorable tax provisions affecting individuals and businesses are set to expire. Given this uncertainty, employers must prepare for changing payroll taxes and new limits on flexible spending account contributions, adoption assistance benefits and educational benefits.
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by Susan Nash and Jacob Mattinson
The Patient Protection and Affordable Care Act (the Act) revised the definition of “medical expenses” in the Internal Revenue Code as it relates to the reimbursement of funds used to purchase over-the-counter (OTC) medicine and drugs. Prior to January 1, 2011, the full cost of OTC medicine and drugs was considered a medical expense eligible for reimbursement from a flexible spending account (FSA) or health reimbursement arrangement (HRA). After January 1, 2011, the Act limits the definition of medical expenses to include only OTC medicine and drugs that are insulin or prescribed by a doctor.
Due to this change, if an FSA or HRA permits reimbursement for medical expenses, the HRA or FSA plan document must be amended, no later than June 30, 2011, to conform to the Act. Employers should, therefore, amend the plan document to provide that expenses for OTC medication and drugs will not be reimbursed without a prescription, with the exception of insulin. Alternatively, the employer may choose to amend the plan document to not provide for reimbursement of OTC medicine or drugs, even when the individual has obtained a prescription.
Please contact your regular McDermott attorney for assistance with any required amendments.