Health care reform affected the eligibility of over-the-counter (OTC) medications for tax-free reimbursement.  Specifically, beginning Jan. 1, 2011, OTC medicines and drugs (other than insulin) must be "prescribed" in order to qualify as "medical care" for purposes of health plans including health FSAs and HRAs  and HSAs.

This change could have a dramatic impact on the way that OTCs are purchased and used by individual consumers. Some are predicting that health care costs will increase as individuals schedule physician office visits to get "OTC prescriptions," or alternatively, opt for more expensive "prescription-only" medications to ensure coverage under their plans.

Despite clarification from the IRS recently, there is still likely to be confusion;

• When is a medicine or drug considered "prescribed"? In other words, is a physician's recommendation enough or must all of the requirements applicable under state law for a valid prescription be satisfied?
• What type of substantiation is required to ensure that a medicine or drug available OTC has actually been "prescribed"?
• How does the new OTC Rule's effective date affect plans and employee FSA elections that are already in place (e.g., plans that have fiscal plan years or calendar year plans with grace periods)?
• How does the OTC Rule impact the use of health debit cards to purchase OTC medicines and drugs?

If you want a copy of the IRS clarification, let us know.  But be warned - it is pretty dry stuff.  Stay tuned for details as we continue to monitor the situation.

The IRS recently announced that it will defer the new requirement for employers to report the cost of coverage under an employer-sponsored group health plan, making that reporting by employers optional in 2011.  At the same time, the IRS released a draft Form W-2 for 2011, which employers use to report wages and employee tax withholding.

The Treasury Department and the IRS have, in their infinite wisdom, determined that this relief is necessary to provide employers the time they need to make changes to their payroll systems or procedures in preparation for compliance with the new reporting requirement. The IRS will be publishing guidance on the new requirement later this year.

Although reporting the cost of coverage will be optional with respect to 2011, the IRS continues to stress that the amounts reportable are not taxable.  The new reporting requirement is intended to be informational only, and to provide employees with greater transparency into overall health care costs. 

What about the future?  Conspiracy theorists, bite your tongues.

The Richmond Times-Dispatch recently reported "Virginia's Medicaid program had improper payments of $39 million in fiscal 2009, including $20.2 million from fraud, an interim study by the state's watchdog agency has concluded." And, "an additional $48 million in potential fraud or error was avoided by blocking improper claims before they were paid, according to the report by Ashley Colvin, an analyst for the Joint Legislative Audit and Review Commission." The data also indicated that "errors in eligibility determination likely have resulted in improper Medicaid payments. Federally required reviews in Virginia have shown that errors occur in almost 8 percent of eligibility determinations." 

Where does one begin?

"NPR has fired Juan Williams after he said when he sees people in Muslim garb at the airport, he gets nervous.

I get nervous when I see people in pilot uniforms hanging around the airport bar. Call me a bigot..."

Click Image for video.

Which reminded me of the Dean Martin/Foster Brooks skit about just such a pilot...

In case you have been living under a rock, Tuesday is an election day.  Regardless of your political bent, it is the privilege of every American citizen to vote. 

Do your part.  Vote.