May 21, 2012

Cafeteria Plan Amendment For Over-The-Counter Drugs Due June 30, 2011 Under IRS Transition Rule

Dawne McKenna Parrish
Dinsmore & Shohl LLP
Monday, June 20, 2011
Health Law & Managed Care / Labor & Employment / Tax
All Federal
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The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 ("Affordable Care Act") requires that medicine or drugs (other than insulin) be prescribed to qualify for reimbursement under employer provided accident and health plans including a health flexible spending account, health reimbursement arrangement, and health savings accounts. Effective January 1, 2011, over-the-counter (OTC) drugs are no longer reimbursable without a prescription.

Many plan sponsors amended their cafeteria plan documents at the end of 2010 to exclude OTC drugs without a prescription from their plan's definition of reimbursable expenses. However, those plan sponsors who have not yet amended their cafeteria plans have until June 30, 2011 to amend the plan to satisfy the new OTC drug requirements retroactive to January 1, 2011 under a special IRS transition rule. See IRS Notice 2010-59. 

© 2012 Dinsmore & Shohl LLP. All rights reserved.

About the Author

Dawne McKenna Parrish
Of Counsel

Dawne McKenna Parrish is a member of the Compensation and Benefits Practice Group in the Corporate Department. Dawne's practice serves a diverse client base including private and publicly-held companies, professional service corporations, and state and local governmental entities. Dawne has extensive experience in the design, preparation and implementation of health, welfare and fringe benefit plans (including health reimbursement arrangements, cafeteria plans, health savings accounts, and flexible spending account plans); qualified retirement plans (including profit sharing, 401(k)...

dawne.parrish@dinsmore.com
513-977-8278
www.dinsmore.com

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