http://www.cobracs.com/Rss/FSA.ashx FSA - News & Review 10 In another attempt to help those called to active military duty, Congress passed House Bill 6081, better known as the HEART Act, with overwhelming bipartisan support. As of this writing, President Bush was expected to sign the law. http://www.cobracs.com/Infinisource/News_Review_Articles/news_review20080610-6.aspx 10 Jun 2008 Employer-sponsored health benefits went on trial at the April Employers Council on Flexible Compensation conference. The verdict, after three days of expert testimony, is that the jury is still out on what will happen. http://www.cobracs.com/Infinisource/News_Review_Articles/news_review20080512-6.aspx 13 May 2008 IRS added three types of expenses to the approved list of medical expenses when it issued Revenue Ruling 2007-72 in December. Section 213 of the Internal Revenue Code broadly defines medical expenses for the purposes of the medical expense tax deduction and for reimbursement under a Health FSA, Health Reimbursement Arrangement or a Health Savings Account. http://www.cobracs.com/Infinisource/News_Review_Articles/news_review20080107-3.aspx 7 Jan 2008 Consider a sad, increasingly familiar situation. A young family suffers a severe financial setback and goes to live with friends or relatives. The host family wants to add the newcomers to their employer-sponsored medical plan so that vital medical expenses are covered. Can they do this? http://www.cobracs.com/Infinisource/News_Review_Articles/news_review20080107-4.aspx 7 Jan 2008 The IRS recently released the 2007 version of Publication 502, which taxpayers use to determine what medical expenses are deductible on their tax returns. This publication also serves as a resource for determining what medical expenses are reimbursable under a Health FSA, Health Savings Account (HSA) or Health Reimbursement Arrangement (HRA). http://www.cobracs.com/Infinisource/News_Review_Articles/news_review20071210-3.aspx 10 Dec 2007 In November 2006, the IRS issued Revenue Ruling 2006-57, long-awaited guidance on the use of debit cards for Section 132 Transportation Plans. The ruling related to the use of debit cards for transit passes, and was due to take effect on January 1, 2008. http://www.cobracs.com/Infinisource/News_Review_Articles/news_review20071112-4.aspx 12 Nov 2007 When is food considered a medical expense? This question was recently posed to the IRS by none other than Rep. John Sarbanes (R-OH). In Information Letter 2007-0037, the IRS clarified its position on when meal replacements and dietary supplements are considered a legitimate expense for medical care. This comes into play for those seeking a medical expense tax deduction and those seeking reimbursement under a Health FSA. http://www.cobracs.com/Infinisource/News_Review_Articles/news_review20071112-3.aspx 12 Nov 2007 Since they were issued in early August 2007, the Proposed Cafeteria Plan Regulations have created a stir in the benefits community. In many respects they have given us much needed guidance on a variety of issues related to Section 125 plans and their component benefit options. However, many open issues remain. http://www.cobracs.com/Infinisource/News_Review_Articles/news_review20071112-2.aspx 12 Nov 2007 In August, the IRS issued Final Regulations on what constitutes an eligible expense for purposes of the Dependent Care tax credit and, more importantly for employers, Dependent Care FSAs. The regulations take immediate effect for the tax credit and can be relied upon currently for Dependent Care FSAs although that effective date is for plan years that start on or after January 1, 2008. The following summarizes the regulations: http://www.cobracs.com/Infinisource/News_Review_Articles/news_review20070910-1.aspx 10 Sep 2007 Ken needs $3,600 in orthodontia starting in February 2009 and lasting for 18 months. His dental plan excludes orthodontia for individuals 18 and over. He elects $4,000 in his Health FSA. Under the Proposed Cafeteria Plan Regulations, issued in August 2007, when may Ken be reimbursed by his Health FSA? http://www.cobracs.com/Infinisource/News_Review_Articles/news_review20070910-10.aspx 10 Sep 2007 In early August, the IRS applied a fresh coat of paint to the collage of prior proposed and temporary cafeteria plan regulations and other guidance, some of which dated back to 1984. The proposed regulations take effect for plan years starting on or after January 1, 2009. Until then, employers may rely on either these proposed regulations or the previous guidance. http://www.cobracs.com/Infinisource/News_Review_Articles/news_review20070813-1.aspx 13 Aug 2007 Its 12:15 p.m., an employee walks in to the pharmacy for a prescription, swipes a tax-advantaged debit card to pay and is out the door. At 3 p.m. the same employee visits a doctor’s office and swipes the debit card for the co-pay amount. One more transaction at 7 p.m. when the employee goes online to order over-the-counter medicine with the same debit card. http://www.cobracs.com/Infinisource/News_Review_Articles/news_review20070813-7.aspx 13 Aug 2007 In May, the IRS issued regulations that clarify when a parent may claim a child as a dependent when the parents of the child are divorced, separated or live apart at all times during the last six months of a calendar year. http://www.cobracs.com/Infinisource/News_Review_Articles/news_review20070611-4.aspx 11 Jun 2007 Two months and 15 days – that's the magical number for Health FSA grace periods. Participants with FSA plan dollars remaining have a limited time to use the pre-tax dollars for medical expenses before the money disappears. http://www.cobracs.com/Infinisource/News_Review_Articles/news_review20070312-2.aspx 12 Mar 2007 The National Anthem plays in the background as a figure of Uncle Sam appears. The picture of patriotism comes to mind for some. For others, the picture of Uncle Sam, with his white hair and goatee, often dressed in red, white and blue with a top hat, bring other thoughts during this time of year – tax time. Never fear, Uncle Sam is here with some written publications to assist. The IRS recently revised two publications to assist with the preparation of taxes, Publications 969 and 15-B. http://www.cobracs.com/Infinisource/News_Review_Articles/news_review20070312-5.aspx 12 Mar 2007 In July 2006, the IRS issued what one might call a homework assignment to major merchants and FSA/HRA electronic payment card/debit card vendors. The assignment was easily understood but not easily accomplished: create an Inventory Information Approval System (IIAS) before 2007 to allow debit card use and auto-substantiation at merchants with non-health care related merchant category codes (MCCs). http://www.cobracs.com/news/stories/new_review20070109-6.asp 9 Jan 2007 Many people are making a list and checking it twice, for very different reasons than the holiday season. Instead of shopping for two turtle doves and a partridge in a pear tree, this season is about ensuring that benefit plans are ready for 2007. Here are some helpful reminders from Infinisource: http://www.cobracs.com/news/stories/new_review20061211-1.asp 11 Dec 2006 The IRS recently provided guidance on who can claim a qualifying child as a dependent for six different purposes. Notice 2006-86 clarifies the rules under Code Section 152(c) for two or more taxpayers claiming a child and for special rules for divorced parents. http://www.cobracs.com/news/stories/new_review20061010-5.asp 10 Oct 2006 In May, the IRS published some much-needed guidance on what constitutes a legitimate expense for purposes of Dependent Care Assistance Plans (DCAPs) and the Dependent Care Tax Credit. The current rules have been in place since the Carter Administration. http://www.cobracs.com/news/stories/new_review20060911-1.asp 11 Sep 2006 On July 11, 2006, the Internal Revenue Service (IRS) issued Notice 2006-69, which expands the acceptable methods for electronic payment card substantiation for a Flexible Savings Arrangement (FSA), Health Reimbursement Arrangement (HRA) and Dependent Care Assistance Program (DCAP). With one exception, the Notice takes effect immediately, and employers and administrators may rely on the Notice in making any necessary changes to substantiation procedures. http://www.cobracs.com/news/stories/new_review20060712-5.asp 14 Jul 2006 What are they: Flexible Spending Accounts (FSAs) are gaining speed around the track in efforts to reduce the cost of health care for both the employee and the employer. The driving force behind these plans is the tax savings for participants with increased spendable income, while the employer reaps the benefits of reduced payroll taxes. http://www.cobracs.com/news/stories/new_review20060614-5.asp 14 Jun 2006 Anyone who works with Dependant Care Assistance Plans (DCAPs) can take a sigh of relief. On May 24, 2006, the IRS issued proposed regulations on Dependent Care expenses, replacing outdated regulations that had not changed in more than two decades. These proposed regulations apply to individuals who participate in DCAPs and who claim the Dependent Care Tax Credit. http://www.cobracs.com/Infinisource/News_Review_Articles/ 14 Jun 2006 Making things easier usually leads to happier employees. Infinisource and SmartFlex have teamed up to make medical purchases through Flexible Spending Accounts (FSAs) easier with a no-hassle Walgreens solution. http://www.cobracs.com/news/stories/new_review20060411-2.asp 11 Apr 2006 Infinisource, Inc. was among several administrators and associations that presented oral comments at an IRS public hearing on Thursday, February 23, 2006, regarding employers’ comparable contributions to HSAs. The hearing was held on the Proposed Regulations issued under § 4980G that were published as a Notice of Proposed Rulemaking in the Federal Register on August 26, 2005. http://www.cobracs.com/news/stories/newsroom20060314-3.asp 16 Mar 2006 Employers concerned about allowing the 2 ½ month grace period for Dependent Care Assistance Plans (DCAPs) can breathe a sigh of relief after the Treasury Department and the IRS published Notice 2005-61 on September 7, 2005, which addressed Form W-2 reporting requirements. http://www.cobracs.com/news/stories/newsroom20051121-3.asp 21 Nov 2005 As Human Resource departments across the country meet with agents and brokers to put the final touches on benefit plan options, many are finding costs continuing to rise. While analysts are expecting the increases to be between eight and 10 percent nationally, out of necessity employers continue to shift more of the financial burden back to the employees. This shift has boosted participation in Flexible Spending Accounts (FSAs) and given employers more incentive to offer the plans. http://www.cobracs.com/news/stories/newsroom20051121-1.asp 21 Nov 2005 IRS and EBSA (the Department of Labor agency in charge of COBRA) issued a joint notice this week relating to the extension of timeframes for benefit plans and participants affected by Hurricane Katrina. Many deadlines related to COBRA, HIPAA, and group health plan claims and appeals do not apply during the period from August 29, 2005 through January 3, 2006. In effect, this period basically ceases to exist for calculating the time frames indicated in the Notice. http://www.cobracs.com/news/stories/newsroom20050920-3.asp 21 Sep 2005 More than two years have passed since the IRS issued Revenue Ruling 2003-43. Yet, some struggle with debit card1 rules for Health FSAs and HRAs. In fact, a few vendors even market cards requiring no paper substantiation (i.e., adjudication)! While this may look good, the old saying holds true: looks can be deceiving, and in this case, can carry devastating consequences, especially in light of an expected increase in IRS audits next year! http://www.cobracs.com/news/stories/newsroom20050817-1.asp 17 Aug 2005 The cost of prescription drugs continues to soar causing many to 'run for the Canadian border' when seeking a lower cost-alternative for medications. The idea is to reduce the cost of prescription drugs. However, when a participant purchases drugs in Canada, the expense is not an allowable deduction as 213(d) medical expenses from a Flexible Spending Account (FSA), according to a Internal Revenue Service (IRS) opinion letter. http://www.cobracs.com/news/stories/newsroom20050517-3.asp 17 May 2005 Dealing with progressively more expensive employee benefits is not easy for employers or employees. Many employers might overlook taking additional steps to save money with their healthcare once a new plan year has started. http://www.cobracs.com/news/stories/newsroom20050421-3.asp 21 Apr 2005 The Treasury Department rejected a request from Senate Finance Chairman Sen. Chuck Grassley (R-IA) to change the use it or lose it rule for Flexible Spending Accounts (FSAs). Treasurer Secretary John Snow contended the department did not have sufficient legal authority to administratively change the longstanding rule. http://www.cobracs.com/news/stories/newsroom20050119-4.asp 19 Jan 2005 Health Savings Accounts (HSA) are designed to bring consumerism to health care by engaging participants in the decision making process. These types of accounts are rapidly growing in popularity because they slow the cost increase of employer benefit plans, provide a new vehicle for retiree health and bring many individuals affordable health care options. http://www.cobracs.com/news/stories/newsroom20050119-2.asp 19 Jan 2005 Cafeteria plans and dependent care flexible spending accounts feel ripple effect The Working Families Tax Relief Act of 2004 (WFTRA) provides a uniform definition of “child” for several tax purposes, including pretax contributions to health plans and flexible spending accounts. The law, H.R.1308, becomes effective January 1, 2005. http://www.cobracs.com/Infinisource/stories/dependent1.asp 19 Jan 2005 The Working Families Assistance Act of 2004, H.R. 4372, would provide a change in Dependent Care Flexible Spending Accounts (FSAs) to allow for $500 of unused expenses to be carried over to the next plan year. The bill passed the House of Representatives and is now awaiting a Senate vote. http://www.cobracs.com/Infinisource/stories/fsa5.asp 29 Oct 2004 Employers do not need to wait until the next plan year to implement a Flexible Spending Account (FSA) for their employees. According to IRS regulations, a transition plan year of less than 12 months in duration is allowable. http://www.cobracs.com/Infinisource/stories/fsa4.asp 14 Jul 2004 Flexible Spending Accounts (FSAs) may soon be freed from the constraints of the infamous use it or lose it rule. The current rule states any FSA dollars not used by the end of the plan year revert back to the plan. “Use it or lose it” can be one of the biggest challenges to FSA success for employers. http://www.cobracs.com/Infinisource/stories/fsa4a.asp 16 Jun 2004 FSAs. MSAs. HRAs. HSAs. Everyone from the President to the Treasury Department continues to support programs designed to somehow take the sting out of rising benefits costs. Great news for all, but keeping the information straight can be a full time job in itself. http://www.cobracs.com/Infinisource/stories/comp1.asp 28 Jan 2004 Ever-rising health care costs and the shifting of those costs back to the employee has boosted participation in Flexible Spending Accounts (FSAs) and given employers more incentive to offer the plans. Fidelity Investments indicates that participation in FSA plans increased approximately 15 percent in the first quarter of 2003 compared to 2002. But even with approximately 75 percent of larger employers offering FSAs, only about 18 percent of eligible workers participate, according to Mercer Human Resource Consulting, based in New York. http://www.cobracs.com/Infinisource/stories/fsa3.asp 14 Nov 2003 The Treasury Department and the IRS announced changes allowing participants to pay for over-the-counter medications with pre-tax dollars from health care flexible spending accounts (FSA) and health reimbursement arrangements (HRA). http://www.cobracs.com/Infinisource/stories/otc1.asp 19 Sep 2003 President George W. Bush, in the 2004 proposed budget, is advocating legislation to eliminate the “use it or lose it” provisions from Flexible Spending Accounts (FSA) and to allow employees to rollover up to $500 in unused contributions to the following plan year. It would also allow employees to withdraw the unused contributions and pay taxes on them or put the contributions in a 401(k) or similar retirement account. http://www.cobracs.com/Infinisource/stories/fsa2.asp 20 Jun 2003 In two new rulings and a letter ruling, the Internal Revenue Service has provided clarification on the tax treatment of certain medical expenses. The determinations are significant to employers and employees because only tax-deductible health care expenses can be funded through health care flexible spending accounts. http://www.cobracs.com/Infinisource/stories/fsa1.asp 28 May 2003 On Tuesday, May 6, 2003, the IRS issued final guidance on the use of debit cards for Flexible Spending Account reimbursements. This week's rulings uphold prior IRS substantiation requirements, including employee certification that expenses are eligible and not reimbursed by any other source. The medical provider must substantiate the incurrence of the expense and the claim must be adjudicated. http://www.cobracs.com/Infinisource/stories/debit1.asp 9 May 2003