On March 23, 2010, President Obama signed into law the Patient Protection and Affordable Care Act (PPACA), HR 3590, followed on March 30th by the Health Care and Education Tax Credit Reconciliation Act of 2010, HR 4872 (Sidecar Bill).
The two pieces of legislation will change the health care landscape in the years to come. Health FSAs and cafeteria plans will be affected.
The following is a timeline of the changes affecting Flexible Spending Accounts:
Changes effective on January 1, 2011
- Over-the-counter drugs: Over-the-counter medicines or drugs are not eligible for reimbursement under a Health FSA, HRA or HSA without a doctor's prescription.
- New safe harbor for small employer cafeteria plans: The Subsection 125 nondiscrimination rules do not apply for cafeteria plans (and some plans offered through a cafeteria plan, such as group term life insurance, self-insured medical and dependent care assistance) if certain requirements are met. For example, all non-excludable employees must be eligible to participate, and the employer must make a minimum level of contribution. Eligible employers must have 100 or fewer employees during either of the two preceding years (provided it is a full year).
Changes effective for plan years starting on or after
January 1, 2013
- Health FSA limit: Contributions are capped at $2,500 each year, indexed by Consumer Price Index (CPI) starting in 2014. The effective date for non-calendar plan years is currently unclear.
Many questions remain to be answered. We will continue to send updates as the implementation regulations are published.
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