For Participants

• The IRS issued new guidance allowing the continued use of health flexible spending account (FSA), health reimbursement arrangement (HRA) and Health Savings Account (HAS) debit cards for the purchase of prescribed OTC medicines and drugs.

• Healthcare Reform Highlights

• The Health Care Reform Bill of 2010 changes the rules for using Medical Flexible Spending Accounts (FSA) and Health Reimbursement Account (HRA) funds to purchase Over-the-Counter (OTC) drugs and medicines.

For Employers

• Beginning January 1, 2011 participants must obtain a prescription from their physician in order to pay for over-the-counter (OTC) drugs or medicines through their flex plans. The prescription may be filed through the pharmacy, or the participant may turn in a manual claim with a detailed receipt for the item and a copy of their prescription attached to the form. This element of the law has not changed.

• The Internal Revenue Service (IRS) released guidance stating that employers will not be required to report the aggregate cost of employer-sponsored health coverage on employees’ W-2 forms issued for 2011. This W-2 reporting requirement was introduced by the Affordable Care Act. The IRS delayed the W-2 reporting requirement to give employers more time to make necessary changes to their pay¬roll systems.

• On Friday, September 3, 2010, the IRS issued its initial guidance with respect to the new rule included in the Affordable Care Act that requires a doctor’s prescription for the reimbursement of over-the-counter (OTC) drug and medicines from a tax-advantaged health care account. While the guidance offers little in the way of new information, it does confirm the generally accepted interpretation of how the change will be applied.