JUNE 30TH DEADLINE TO AMEND CAFETERIA PLANS FOR OVER-THE-COUNTER DRUG RESTRICTION
The Internal Revenue Service ("IRS") announced in Notice 2010-59 that section 125 cafeteria plans must be amended for the over-the-counter drug restriction by June 30, 2011. Cafeteria plans that allowed tax-free reimbursements for over-the-counter ("OTC") medicines and drugs that were not prescribed must be amended to provide this restriction effective January 1, 2011.
The Federal health care reform law bans tax-free reimbursements for OTC drugs -- other than insulin -- from group health plans (including health flexible spending or reimbursement arrangements), health savings accounts, and Archer medical savings accounts effective January 1, 2011.
The IRS will allow cafeteria plan amendments adopted by June 30, 2011 for this reform to apply retroactively to January 1, 2011, the effective date of the restriction.
This client alert is intended to inform you of developments in the law and to provide information of general interest. It is not intended to constitute legal advice regarding a client's specific legal issues and should not be relied upon as such. This client alert may be considered advertising under the rules of the Massachusetts Supreme Judicial Court.