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Tax Savings Calculator
How much can your employees save in taxes by participating in cafeteria/flex and transit & parking plans?
Eligible Expense List
What expenses are eligible for reimbursement under a cafeteria/flex plan?
Clients/Employers
IRS Guidance
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Cafeteria Plans
Rev. Ruling 2007-72 Diagnostic Medical Procedures
(Excerpt from Dec. 10th IRS Bulletin 2007-50 I.R.B.) reaffirms that medically related diagnostic procedures qualify as medical care. The ruling includes examples of diagnostic procedures eligible under Section 213, even if the medical condition does not exist. However, please take caution with respect to "procedures" that are not designed to identify a medical condition or change in functioning of the body. For example, genetic testing to determine future height or some other non-medical characteristic would not be eligible under Section 213. IRB 2007-50.
August 6, 2007: The long-awaited integrated cafeteria plan regulations have been published in the Federal Register.
Download and review the new regulations here (REG-142695-05).
Payment Card
Notice N-2007-02
Amounts Received Under Accident and Health Plans- This notice provides transition relief with respect to the use of debit cards for medical expense reimbursements at certain merchants with non-health care related merchant category codes. It also addresses the use of debit cards for medical expense reimbursements at stores with the Drug Stores and Pharmacies merchant category code. Notice N-2007-02
Notice 2006-69:
Debit cards used to reimburse participants in self-insured medical reimbursement plans and dependent care assistance programs- The IRS has issued new guidance on the use of debit cards, credit cards, and stored value cards (electronic payment cards) for health FSAs, HRAs, and--for the first time--dependent care assistance programs (DCAPs). This guidance expands on the original electronic card guidance issued in 2003, and adds new methods of substantiation and much more. Notice 2006-69
Debit Card Revenue Ruling 2003-43
Employer-provided reimbursement through debit or credit cards are excludable from income2003-43Health Care Spending Account (Health FSA)
2008 Mileage Rate for Medical Care
Nov. 27th, 2007 - IRS announces standard mileage rates for 2008. Revenue Procedure 2007-70.Treasury and IRS Announce over-the-counter Drugs to be covered by Health Care Flexible Spending Accounts
- Wonders never cease!
The IRS has reversed a long-standing posture regarding reimbursement of non-prescription drugs and medicines with Health FSAs or Health Reimbursement Arrangements (HRA). Items such as antacid, allergy medicine, pain relievers, and cold medicine are now considered eligible medical expenses under Code Section 105 (b). - Most Plan Documents have followed the language of the IRS' prior position and only allow for Section 213 defined medical expenses deductible on Form 1040 Schedule A. If your Plan Document specifically references Section 213 rather than Section 105 (b), it will need to be amended before participants may take advantage of the new ruling. Creative Benefits is moving as rapidly as possible to support the new ruling.
- Vitamins and supplements taken to promote general well-being are still not considered reimbursable expenses under an FSA or HRA plan.
- Approving these "Over-the-Counter" drugs
is one of the most significant changes in IRS policy
in years. We welcome the change and hope it is a foreshadowing
of more good news from the IRS regarding Flexible Spending
Accounts and Health Reimbursement Arrangements. We
are monitoring industry response to the news to understand
the implications of the announcement. We will continue
to keep you informed as developments unfold. Please
contact us if you have specific questions that we can
help you address.
Read the official press release here or the Ruling - Rev.Rul.2003-102
Dependent Care Spending Account (DCSA)
May 24, 2006. IRS issued proposed regulations under Code Section 21
Dealing with dependent care expenses, replacing regulations that were issued 22 years ago. Prop. Treas. Regs. Secs. 1.21-1, 1.21-2, 1.21-3, and 1.21-4, 71 Fed. Reg. 29847
Health Savings Accounts
Treasury, IRS Issue Guidance Helping Employees Transition To HSAs
- February 15, 2007: The U.S. Treasury and Internal Revenue Service today issued guidance regarding how employers can rollover their health Flexible Spending Arrangements (health FSAs) and Health Reimbursement Arrangements (HRAs) to Health Savings Accounts (HSAs) for their employees.
- The Tax Relief and Health Care Act of 2006, Pub. L. No. 109-432, enacted December 20, 2006, allowed employers to amend their health FSAs or HRAs, with balances on September 21, 2006, for a one-time roll over to an HSAs by 2012. The guidance clarifies the requirements for making these rollovers, which must be made directly to the custodian or trustee of the HSA.
- Under the guidance, a Health Care Flexible Spending Account or Health Reimbvursement Arrangement (HRA) must be amended and a rollover selected by an employee before the end of the plan year. The balance amount must be transferred to the HSA by March 15 of the following year. The ability to make these transfers will facilitate the transition to an HSA-eligible health plan when employees are covered by an HRA or FSA.
- In addition, the guidance provides a special transition rule for transfers for 2006. Under the transition rule, the amendment, election and transfer must take place by March 15, 2007.
<<Read the Guidance here>>
2006 Limits Released for Health Savings Accounts, Adoption, Transit, LTC,
Personal & Child Tax Credits IR-2005-130 Rev. Proc. 2005-70
March 30, 2004, the Treasury Department and the IRS issued additional guidance for health savings accounts (HSAs).
The guidance clarifies preventive care that can be provided under a high deductible health plan (HDHP) and how the HDHP interacts with other prescription drug benefits. In addition to the press release, there are four separate pieces of guidance provided.- Read the Treasury press release
- Notice
2004-23 defines the types of preventive care that
can be provided under an HDHP.
- Notice
2004-25 provides transition relief for 2004, so
that HSA distributions for medical expenses incurred
between the date on or after January 1, 2004 that an
individual becomes an eligible individual (is covered
by a HDHP, etc.) and the date on or before April 15,
2005 that the individual establishes his or her HSA
will be tax-free if the various HSA requirements are
met.
- Rev.
Rul. 2004-38 clarifies that individuals covered
by a health plan that provides prescription drug benefits
before the minimum annual deductible of an HDHP has
been satisfied may not make contributions to an HSA.
- Rev.
Proc. 2004-22 provides transition relief for individuals
covered by a HDHP who would be eligible individuals
but for the fact that they are covered by a prescription
drug plan that provides benefits before
the deductible of the HDHP is satisfied. Under the transition
relief, for 2004 and 2005 such individuals will be considered
to be eligible individuals who can contribute to an HSA.
FAQs on HSAs
Health
Savings
Accounts (HSAs): Technical Guidance
Internal Revenue Service Guidance
Section
105. - Amounts Received Under Accident and Health Plans
(Also Section 213. - Medical, Dental, etc., Expenses) - Rev, Rul. 2003-102
Employer’s Tax Guide to Fringe Benefits - Pub 15b
Effect of the Family and Medical Leave Act on the Operation of Cafeteria Plans - Bulletin 2001-45
Tax Treatment of Cafeteria Plan - Bulletin 2000-15
Tax Treatment of Cafeteria Plan - Bulletin 1997-51
Tax Treatment of Cafeteria Plan - Bulletin 2001-7
Tax Treatment of Cafeteria Plan - Bulletin 2007-50
Frequently Asked Questions
Section
213.--Medical, Dental, etc., Expenses, 26 CFR 1.213-1:
Medical, dental, etc., expenses - Rev. Rul. 2003-58 (IRS-Drop)
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