- it requires a prescription,
- it is available without a prescription
(over-the-counter) and the individual obtains a prescription
from his or her physician, or
The Internal Revenue Service
("IRS") recently released Notice 2010-59, which provides
guidance on implementation of this new provision. According to
the Notice, the new reimbursement provision is effective for all
plans (regardless of plan year) on January 1, 2011. The Notice
advises that employer-sponsored health plans will not be able to
reimburse any newly-ineligible items purchased on or after
January 1, 2011, even if the plan otherwise utilizes a grace
period. However, to help with the administrative transition,
the IRS will not challenge the use of an account-based debit card for
over-the-counter medications obtained without a prescription prior to
January 16, 2011.
Plans may reimburse the cost of
over-the-counter medications that were purchased without a
prescription prior to January 1, 2011, pursuant to the terms of the
employer's plan.
The Notice gives plans until June
30, 2011, to adopt conforming plan amendments. Despite a
general rule prohibiting Internal Revenue Code Section 125 cafeteria
plans from adopting retroactive amendments, the Notice provides that
amendments made to conform to the new reimbursement requirements will
be treated as effective retroactively for expenses incurred after
December 31, 2010.
A copy of Notice 2010-59 is available here.
If you have
any questions please contact:
Edward C.
Hammond at (248) 988-1821 - ehammond@clarkhill.com,
John
P. Schneider at (616) 608-1108 - jschneider@clarkhill.com,
Kristi
R. Gauthier at (248) 988-5854 - kgauthier@clarkhill.com,
or
Ellen Hoeppner at (313) 965-8262 - ehoeppner@clarkhill.com.
