Tax-Free Reimbursement for Adult Children up to Age 27

The IRS released Notice 2010-38 April 27, 2010 clarifying the expanded health care tax exclusion for children through the end of the calendar year in which a child turns age 26 as added by the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act. The Act expanded the definition of "dependent" for purposes of tax free health coverage under Code Sections 105 [accident and health coverage], 401(h) [health care accounts in pension plans], 501(c )(9) [VEBAs] and 162 [self employed deduction] to include Adult Children.

This expansion, which was effective March 30, 2010, will have an immediate impact on plans that define eligibility based on reference to the definition of health care dependent found in Section 105(b) of the Code including many health flexible spending arrangements (FSAs) and health reimbursement arrangements (HRAs). This expansion overlaps with (but differs slightly from) the health insurance coverage mandate under the Act that requires "group health plans" to provide coverage of children to age 26 (this insurance reform is effective for plan years beginning on or after September 23, 2010).

Source: ECFC, John Hickman and Ashley Gillihan, Alston & Bird, LLP

April 27, 2010 · Categories: FSA · Read article »

COBRA Subsidy Extended to May 31, 2010

On April 15, 2010, the Senate passed HR 4851, the Continuing Extension Act of 2010, which included an extension of the COBRA subsidy. Later, the House approved the bill as well, and President Obama signed the measure later the same evening.

The bill extends the end of the COBRA subsidy period from March 31, 2010 to May 31, 2010.

It is likely that Congress will continue the approach of short-term fixes, rather than a longer extension for the remainder of the year. Discovery will continue to keep you updated as legislative changes are passed.

April 16, 2010 · Categories: COBRA · Read article »

January 1, 2011 Changes to Over-the-Counter Eligibility for Reimbursement

On March 23, 2010 President Obama signed the Patient Protection and Affordable Care Act (commonly referred to as health care reform) that includes changes to the classification of over-the-counter (OTC) drugs, medicines and biologicals as eligible expenses for reimbursement from flexible spending accounts, health reimbursement arrangements and health savings accounts. Below is a summary of the change in the law and how it impacts your plan and employee reimbursement.

April 6, 2010 · Categories: General, HSA, HRA, FSA · Read article »