The following are highlights of some upcoming changes including OTC Medications and  Commuter Choice Limits and Adult Children.

Over-The-Counter Medications – Rx Required For Reimbursement - eff. Jan. 1, 2011

Effective with purchases made on or after January 1, 2011, a prescription will be required to be reimbursed from your Medical Flex Spending (Med-FSA) and Health Reimbursement Arrangements (HRA) accounts as well as Health Savings Accounts (HSA).  For more information, look for article V10.24 published last week.  Please note that the OTC Medication “flier”  has already been updated since it was published last week and it will be updated regularly as additional information and clarification is received. 

Commuter Choice Limits – Mass-Transit $120 and Parking $230 (Estimated) – eff. Jan. 1, 2011

The 2009 law that increased the Mass Transit benefit from $120 per month to $230 per month will end on 12/31/2010.  Unless an extension is authorized (which appears unlikely) or the IRS issues a cost-of-living adjustment (possible), the Mass Transit monthly benefit limit will drop from $230 per month to $120 per month effective 1/1/2011.  This limit change will apply to all plans and all plan years, including fiscal plan years.  We will notify you as soon as possible after the IRS releases the Cost of Living Adjustments, usually in mid-to-late November, and we will publish updated brochures and SPDs as soon as possible thereafter.

Adult Children Up To Age 26 Eligible (for health plan years beginning on or after Sept. 23, 2010)

For health plans (including the Med-Flex and HRA benefits) with plan years that began on or after September 23, 2010, the definition of an eligible dependent has been changed to include a son, daughter, stepchild, adopted child or eligible foster child under the age of 27 in the relevant taxable year. The child need not be a dependent for tax purposes. 

Health Savings Accounts – eff. Jan. 1, 2011, the Excise Tax increases from 10% to 20%

The excise penalty for withdrawals from a Health Savings Account for non-medical reasons/expenses has increased from 10% to 20% effective January 1, 2011.

SIMPLE Cafeteria Plan – eff. Jan. 1, 2011

Beginning in 2011, Employers who establish a Simple Cafeteria Plan and make mandatory employer contributions to the plan (2% of compensation, 6% of compensation or 2 times the employee contributions) will not be subject to the Key and Highly Compensated employee requirements.  Other minimum participation requirements apply.

Medical Flex Spending Account (Med-FSA) Maximum Benefit will be $2,500 eff. Jan. 1, 2013 

Contributions/Elections for the Medical Flex Spending Account benefit will be limited to $2,500 for taxable years beginning after 12/31/2012, subject to annual cost of living adjustments. 

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