INFORMATION IF YOU HAVE A FLEX PLAN OR A HEALTH REIMBURSEMENT ACCOUNT

Here is a change that is coming up that you need to be aware of.

If you have cash left in your flex plan or health reimbursement account consider buying over-the-counter drugs this year. The new health care law provides that for purchases after 2010, flex plans and HRAs can’t reimburse the cost of such medications. Payments are allowed only for prescriptions and insulin.

The same is true for for payouts from health savings accounts and Archer MSAs. There is a limited exception for plans using debit cards. The Internal Revenue will okay over-the-counter drug purchases made with the cards through January 15, 2011
to give debit card issuers a little extra time to reprogram their computer systems.

Don't forget that plans will have to be amended by June 30, 2011 to comply with the rules. The revision must be retroactive to Jan. 1 (or Jan. 15 for plans using debit cards).