Published May 2010
The recent passage of Health Care Reform legislation will affect virtually every American in one way or another. Among many other health care benefits, regulations for Flexible Spending Accounts have also been altered by Health Care Reform.
Children up to Age 26
- There is a requirement for group health insurance plans to cover children up to age 26. This requirement applies to plan years that begin on or after September 23, 2010. Plans that run on a calendar year, as most do, would not have to begin covering these young adults until January 1, 2011.
- Effective March 30, 2010 parents can now use their flexible spending accounts to pay for medical expenses for their children regardless of tax dependency status, as long as the child does not reach age 27 in that tax year. With employer approval, employees can now increase contributions to their flexible spending accounts midyear to pay for medical expenses for their dependents up to 26 years old.
Over-the-Counter (OTC) Medicine
OTC medicine is still eligible, however, effective January 1, 2011, a prescription or letter of medical necessity will be required for OTC medicines to be reimbursed through an FSA, HRA or HSA. OTC items such as insulin, contact lens solution, bandages and durable medical equipment will continue to be covered without a prescription. A copy of BASIC’s Letter of Medical Necessity form can be found by clicking here.
For tax years beginning after 12/31/2012, annual Health FSA contributions will be capped at $2,500. Starting in 2014, this contribution limit will increase each year to adjust for inflation.
If you are a current client of BASIC Flex, please call 800-372-3539 if you have any questions.