Over-the-Counter medicines will no longer be reimbursable from a FSA, HRA, or HSA after Jan. 1, 2011 without a doctor’s prescription. The Jan. 1, 2011 date refers to the tax year not the plan year. If the plan year is not a calendar year and straddles 2010 and 2011, the plan must discontinue reimbursement for over-the-counter medicines purchased Jan. 1, 2011 or after.
Non-qualified distributions made after Dec. 31, 2010 from a HSA will be subject to a 20% excise tax, as well as income tax. That is an increase from the current 10% excise tax.
Cafeteria Plans sponsored by Employers with 100 or fewer employees during either 2009 or 2010 will have a safe harbor from nondiscrimination rules for tax years beginning Jan. 1, 2011, provided certain requirements are met such as (a) all non-excludable employees are eligible to participate and (b) certain minimum contribution requirements are met.
