Articles and Newsletters

Client Alert from the Labor and Employment Group - June 2011

June 30th Deadline for Amendments to Cafeteria Plans

By Jeremy J. Sharp

Employers who have not already done so have until June 30, 2011, to amend their cafeteria plans to comply with changes under the Patient Protection and Affordable Care Act (the "Affordable Care Act") with respect to reimbursements for over-the-counter drugs. (See IRS Notice 2010-59) The Affordable Care Act amended the Internal Revenue Code (the "Code") effective December 31, 2010, to require a prescription in order to obtain reimbursement for over-the-counter drugs under the plan's health flexible spending account ("FSA") feature.

Insulin is exempt from the new reimbursement rules, but all plans (whether they are "grandfathered" plans under the Affordable Care Act or not) must comply by the end of June. Employers who have not already done so should amend their plan documents, summary plan descriptions and claim forms, and notify participants of this change as soon as possible.