House to Rule on OTC Restrcitions

WASHINGTON—The House Ways and Means Committee is expected to vote on and pass legislation that would overturn an unpopular provision in the health care reform law that restricts the use of flexible spending accounts and health savings accounts to reimburse employees for over-the-counter medications.


Under that provision, FSA reimbursement is permitted only if the employee obtains a prescription for the medication, while in the case of HSAs, OTC reimbursement is permitted without a prescription, but a 20% federal tax is imposed on the distribution.

The bill, H.R. 5842, to be considered Thursday by the committee, would eliminate the OTC restrictions in the Patient Protection and Affordable Care Act of 2010.

The restrictions are very unpopular among employers. Sixty-two percent of employers responding to a Midwest Business Group on Health survey said they favored repeal of the provision, which made it the second most unpopular health care reform law provision among respondents. The most unpopular was the provision, effective in 2013, that will place a $2,500 annual cap on FSA contributions.

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Regulators Provide Additional Guidance on SBC's

Adding additional certainty to previous guidance, federal regulators made clear that they will not impose financial penalties on employers that do not fully comply with health care reform law requirements that will require them to distribute to employees a new summary of benefits and coverage statement.


In February, the Obama administration delayed by six months the requirement to distribute to employees the new summary of benefits and coverage statement.The requirement will go into effect for plan years that begin on or after Sept. 23, 2012. For example, if a plan year begins on Jan. 1, 2013, and the employer's open enrollment period is from Oct. 1 to Nov. 1, the new SBC would have to be available by Oct. 1, 2012.At the time, regulators said they did not “intend” to impose penalties during the first year the requirement is in effect so long as employers are working in “good faith” to comply.In the latest guidance, released as part of frequently asked questions and answers, regulators said during the first year the requirement is in effect agencies “will not impose penalties on plans and issuers that are working diligently and in good faith to comply.”Benefit experts welcome the latest clarification. 

To view the FAQ's click here and here

To view the sample template of the SBC click here