Tools

Log in here

Have you been HIPAA Authorized? If so, click here to login to our secure Client Website. If not, contact your Client Services Team.

Adding Services?

IRS Primer

Need help understanding regulations? Click here for terms and explanations.

Pop-Up Windows

Links to our PDF forms, documents, external resources and some help items are set to open in new browser windows. You may need to set your browser's pop-up blocker to accept pop-up windows for this site.

Tax Savings Calculator

How much can your employees save in taxes by participating in cafeteria/flex and transit & parking plans?

Eligible Expense List

What expenses are eligible for reimbursement under a cafeteria/flex plan?

Clients/Employers
IRS Guidance

Contract All | Expand All (choose "Expand All" before printing)
Click the + underlined heading to read more.

Cafeteria Plans

Rev. Ruling 2007-72 Diagnostic Medical Procedures

(Excerpt from Dec. 10th IRS Bulletin 2007-50 I.R.B.) reaffirms that medically related diagnostic procedures qualify as medical care. The ruling includes examples of diagnostic procedures eligible under Section 213, even if the medical condition does not exist. However, please take caution with respect to "procedures" that are not designed to identify a medical condition or change in functioning of the body. For example, genetic testing to determine future height or some other non-medical characteristic would not be eligible under Section 213. IRB 2007-50.

August 6, 2007: The long-awaited integrated cafeteria plan regulations have been published in the Federal Register.

Download and review the new regulations here (REG-142695-05).

Payment Card

Notice N-2007-02

Amounts Received Under Accident and Health Plans

This notice provides transition relief with respect to the use of debit cards for medical expense reimbursements at certain merchants with non-health care related merchant category codes. It also addresses the use of debit cards for medical expense reimbursements at stores with the Drug Stores and Pharmacies merchant category code. Notice N-2007-02

Notice 2006-69:

Debit cards used to reimburse participants in self-insured medical reimbursement plans and dependent care assistance programs

The IRS has issued new guidance on the use of debit cards, credit cards, and stored value cards (electronic payment cards) for health FSAs, HRAs, and--for the first time--dependent care assistance programs (DCAPs). This guidance expands on the original electronic card guidance issued in 2003, and adds new methods of substantiation and much more. Notice 2006-69

Debit Card Revenue Ruling 2003-43

Employer-provided reimbursement through debit or credit cards are excludable from income2003-43

Health Care Spending Account (Health FSA)

President Signs Military Tax Relief Bill (HEART Act)

On June 17, 2008, President Bush signed the Heroes Earnings Assistance and Relief Tax (HEART) Act (HR 6081). The legislation addresses the treatment of certain payments made to individuals who are called to active military service. Specific to health flexible spending accounts ("FSA"), the HEART Act permits "qualified reservist distributions."

A qualified reservist distribution is a distribution to an individual of all or a portion of the balance in their account if they are called to active military service for a period in excess of 179 days.

The bill states that the qualified reservist distribution may be made during the period beginning with the call to active duty and ending on the last day of the coverage period of the health FSA that includes the date of the call to active duty. This is an exception from the"use-or-lose-it"requirement that all amounts contributed to a health FSA must be used for qualified medical expenses or the amounts will be forfeited at the end of the plan year. Read the article here.

IRS Increases Medical Mileage

IRS increases the medical mileage rate by eight (8) cents for the last six months of 2008. The medical mileage rate increased from 19 cents to 27 cents a mile for expenses incurred between July 1 until December 31, 2008. Read the announcement here. For IRS information go to http://www.irs.gov/newsroom.

2008 Mileage Rate for Medical Care

Nov. 27th, 2007 - IRS announces standard mileage rates for 2008. Revenue Procedure 2007-70.

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

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 or the Ruling - Rev.Rul.2003-102

Dependent Care Spending Account (DCSA)

May 24, 2006. IRS issued proposed regulations under Code Section 21

Dealing with dependent care expenses, replacing regulations that were issued 22 years ago. Prop. Treas. Regs. Secs. 1.21-1, 1.21-2, 1.21-3, and 1.21-4, 71 Fed. Reg. 29847

Health Savings Accounts

Treasury and IRS officials busy! More HSA Guidance released today.

6/25/08: The Treasury Department and the Internal Revenue Service today released Notice 2008-59, which provides employers and employees with a new set of formal questions and answers on Health Savings Accounts (HSAs).

Since HSAs were created as part of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, Treasury and the IRS have issued a large number of formal guidance items containing questions and answers on HSAs. Notice 2008-59 contains over 40 new frequently asked questions and answers that cover a wide range of topics, including: Who is an Eligible Individual; Issues related to High Deductible Health Plans; Contributions to HSAs; Distributions from HSAs; and Establishing an HSA. Notice 2008-59

Treasury, IRS Issue Guidance Helping Employees Transition To HSAs

February 15, 2007: The U.S. Treasury and Internal Revenue Service today issued guidance regarding how employers can rollover their health Flexible Spending Arrangements (health FSAs) and Health Reimbursement Arrangements (HRAs) to Health Savings Accounts (HSAs) for their employees.
The Tax Relief and Health Care Act of 2006, Pub. L. No. 109-432, enacted December 20, 2006, allowed employers to amend their health FSAs or HRAs, with balances on September 21, 2006, for a one-time roll over to an HSAs by 2012. The guidance clarifies the requirements for making these rollovers, which must be made directly to the custodian or trustee of the HSA.
Under the guidance, a Health Care Flexible Spending Account or Health Reimbvursement Arrangement (HRA) must be amended and a rollover selected by an employee before the end of the plan year. The balance amount must be transferred to the HSA by March 15 of the following year. The ability to make these transfers will facilitate the transition to an HSA-eligible health plan when employees are covered by an HRA or FSA.
In addition, the guidance provides a special transition rule for transfers for 2006. Under the transition rule, the amendment, election and transfer must take place by March 15, 2007.
<<Read the Guidance here>>

2006 Limits Released for Health Savings Accounts, Adoption, Transit, LTC, Personal & Child Tax Credits IR-2005-130 Rev. Proc. 2005-70

March 30, 2004, the Treasury Department and the IRS issued additional guidance for health savings accounts (HSAs).

The guidance clarifies preventive care that can be provided under a high deductible health plan (HDHP) and how the HDHP interacts with other prescription drug benefits. In addition to the press release, there are four separate pieces of guidance provided.

Read the Treasury press release
Notice 2004-23 defines the types of preventive care that can be provided under an HDHP.
Notice 2004-25 provides transition relief for 2004, so that HSA distributions for medical expenses incurred between the date on or after January 1, 2004 that an individual becomes an eligible individual (is covered by a HDHP, etc.) and the date on or before April 15, 2005 that the individual establishes his or her HSA will be tax-free if the various HSA requirements are met.
Rev. Rul. 2004-38 clarifies that individuals covered by a health plan that provides prescription drug benefits before the minimum annual deductible of an HDHP has been satisfied may not make contributions to an HSA.
Rev. Proc. 2004-22 provides transition relief for individuals covered by a HDHP who would be eligible individuals but for the fact that they are covered by a prescription drug plan that provides benefits before the deductible of the HDHP is satisfied. Under the transition relief, for 2004 and 2005 such individuals will be considered to be eligible individuals who can contribute to an HSA.

FAQs on HSAs

Health Savings Accounts (HSAs): Technical Guidance

Internal Revenue Service Guidance

Section 105. - Amounts Received Under Accident and Health Plans
(Also Section 213. - Medical, Dental, etc., Expenses) - Rev, Rul. 2003-102

Section 213.--Medical, Dental, etc., Expenses, 26 CFR 1.213-1: Medical, dental, etc., expenses - Rev. Rul. 2003-58 (IRS-Drop)

PDF Help

Having trouble downloading/opening a PDF file?

First: Set your browser to allow pop-up windows for this site. Second: Update your Adobe Reader. Get the latest version available from Adobe (it's free).

Next: Try this work-around from Adobe to save the PDF file to your hard drive and open in Adobe Reader:

Right-click the link to the PDF file and then choose Save Target As (Internet Explorer) or Save Link As (Netscape Navigator).
In the Save As dialog box, select a location on the hard disk, and then click Save.
Double-click the PDF file to open in Adobe Reader.

More Help: You can access the Adobe site here.

Click on "Support" and then select "Help with the Free Adobe Reader Software."