News Archives 2003

A technical correction has been added to the Medicare Rx bill that eliminates the 1099 requirement imposed by the Revenue Ruling issued (2003-43) in June. This is great news for FSA participants and employers who wish to offer participants greater convenience!

The revenue ruling required payments totaling $600 or more to a specific provider to be reported as Miscellaneous taxable income on Form 1099. The 1099 requirement did not apply to prescription drugs.

What now? Those employer who limited the card to Rx should open the gates! Those who canceled the card should consider offering it! Those who have been wary of entering the new and exciting payment card world, go for it!

There's no impediment to using the card. Employees love it! Increases in FSA enrollment are common. The process is easy-to-understand and will only get easier as technology advances. Call us to add the card or to have your questions answered.

On another note, we did not get the $500 rollover for FSAs. We understand there is bi-partisan support for this measure, however and it is expected to be included in key pension reform language next year. We'll keep you up-to-date!

Is the Remedy Worth The Administrative Headache?
Read more about the Ruling here.

Plastic! The buzzword of 2003! You gotta have it!
Read more about Payment Cards/Debit cards here.

The companies were ranked by growth from 2000-2002.

Additionally, CB was named 19th of Women-owned business headquartered in San Diego, when ranked by 2002 gross revenue.

Creative Benefits is also featured in the lead paragraphs of an article describing women-owned businesses!

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 (Treasury and IRS Announce over-the-counter Drugs to be covered by Health Care Flexible Spending Accounts)

Ruling: Section 105. - Amounts Received Under Accident and Health Plans
(Also Section 213. - Medical, Dental, etc., Expenses)

The teleweb was offered by the Employee Benefits Institute of America.

The teleweb was offered by the Employee Benefits Institute of America on

The training session was sponsored by the Employee Benefits Institute of America.

They were awarded by the Academy for Professional Standards and Ethics of the Employers Council on Flexible Compensation.

This designation is the highest awarded by the ECFC and recognizes their expertise as qualified to instruct others. Dana, Therasa and Kris join Jody as 4 of just under 150 practitioners nationwide who have been awarded this designation. The ECFC also awards a CFC (Certified, Flexible Compensation) designation to those who pass an exam and complete a rigorous course of study. Of the more than 200 practitioners nationwide who are CFC's, CB has 8 staff members who hold this designation.

Join us in congratulating them.

Jody Dietel, Dana Hofseth, Kris Saunders and Therasa Cheng attended the ECFC's Cafeteria Plan Administrators Conference.

Dana Hofseth participated in a panel entitled "Electronic Substantiation: Myth versus reality"

Jody Dietel spoke at ECFC's Cafeteria Plan Administrators Conference on "Ethical Challenges for Administrators"

The training session was held August 2 at Creative Benefits.

The course is sponsored by The Employers Council on Cafeteria Plans.

COBRA Analysts attended a teleconference on the new COBRA regulations 7/31/2003.

Jody Dietel, Dana Hofseth, Kris Saunders and Therasa Cheng attended EBIA's Advanced Cafeteria Plan Seminar in Seattle, 7/24-25.

Kim Brockie attended Travis Software's COBRA Training in Houston 7/24.

The panel was entitled "Real World Experiences." CB has more than 12,000 debit cards in circulation.

The IRS has finally issued its long-awaited electronic payment card (aka debit card) guidance in the form of Revenue Ruling 2003-43. The guidance resolves many claims substantiation issues associated with electronic payment card systems by providing helpful auto-adjudication safe harbors. However, the guidance raises a caution flag with regard to Form 1099 reporting obligations for plan sponsors and administrators that use electronic payment cards whereby funds are transferred to the provider from an employer or plan (we call this the “direct pay approach” below). The following is an overview of what the IRS has to say about electronic payment cards in the guidance.

Read the entire article in a special edition of our Benefit Bits newsletter.