Does the changes to Health Accounts under Health Care Reform Impact you?

The health care reform legislation makes significant changes to health accounts, including the following:

The definition of “qualified medical expenses” for purposes of reimbursement from health flexible spending accounts (FSAs), health reimbursement arrangements (HRAs), and distributions from Archer medical savings accounts (Archer MSAs) and health savings accounts (HSAs) has been changed. Under the new definition, qualified medical expenses include amounts paid for medication or drugs only if the medication or drug is a prescribed drug – regardless of whether the drug is available without a prescription. The one exception is insulin. These limits are effected for expenses incurred (for FSAs and HRAs) and amounts paid (for HSAs and Archer MSAs) with respect to taxable years beginning after Dec. 31, 2010.

Currently, there is no federal limit on contributions for health FSAs per year, but in 2013 a health FSA offered through a cafeteria plan will need to limit the amount of salary reduction contributions that employees can make to $2,500 per year, subject to cost-of-living expenses in future years.

Source: The Ward Agency