He said "effictive Jan 1st". He didn't day Jan 1st, 2013. Considering this is only FEBRUARY, why would I think he meant NEXT YEAR. Also, you need to learn to read the ACTUAL bill. This isn't a limitation on Health Spending Accounts, but on FLEXIBLE Spending Accounts, and only FSA's under specific "Cafeteria Plans":
SEC. 9005. LIMITATION ON HEALTH FLEXIBLE SPENDING ARRANGEMENTS
UNDER CAFETERIA PLANS.
(a) IN GENERAL.—Section 125 of the Internal Revenue Code
of 1986 is amended—
(1) by redesignating subsections (i) and (j) as subsections
(j) and (k), respectively, and
26 USC 125.
26 USC 220 note.
26 USC 106 note.
26 USC 220 note.
26 USC 106.
26 USC 220.
26 USC 223.
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26 USC 6051
note.
VerDate Nov 24 2008 11:34 May 26, 2010 Jkt 089139 PO 00148 Frm 00736 Fmt 6580 Sfmt 6581 E
UBLAWPUBL148.111 APPS06 PsN: PUBL148 dkrause on GSDDPC29PROD with PUBLIC LAWS
PUBLIC LAW 111–148—MAR. 23, 2010 124 STAT. 855
(2) by inserting after subsection (h) the following new subsection:
‘‘(i) LIMITATION ON HEALTH FLEXIBLE SPENDING ARRANGEMENTS.—
For purposes of this section, if a benefit is provided under
a cafeteria plan through employer contributions to a health flexible
spending arrangement, such benefit shall not be treated as a qualified
benefit unless the cafeteria plan provides that an employee
may not elect for any taxable year to have salary reduction contributions
in excess of $2,500 made to such arrangement.’’.
(b) EFFECTIVE DATE.—The amendments made by this section
shall apply to taxable years beginning after December 31, 2010.
SEC. 9006. EXPANSION OF INFORMATION REPORTING REQUIREMENTS.
(a) IN GENERAL.—Section 6041 of the Internal Revenue Code
of 1986 is amended by adding at the end the following new subsections:
‘‘(h) APPLICATION TO CORPORATIONSnt-size: 12px;">
.—Notwithstanding any
regulation prescribed by the Secretary before the date of the enactment
of this subsection, for purposes of this section the term ‘person’
includes any corporation that is not an organization exempt from
tax under section 501(a).
‘‘(i) REGULATIONS.—The Secretary may prescribe such regulations
and other guidance as may be appropriate or necessary to
carry out the purposes of this section, including rules to prevent
duplicative reporting of transactions.’’.
(b) PAYMENTS FOR PROPERTY AND OTHER GROSS PROCEEDS.—
Subsection (a) of section 6041 of the Internal Revenue Code of
1986 is amended—
(1) by inserting ‘‘amounts in consideration for property,’’
after ‘‘wages,’’,
(2) by inserting ‘‘gross proceeds,’’ after ‘‘emoluments, or
other’’, and
(3) by inserting ‘‘gross proceeds,’’ after ‘‘setting forth the
amount of such’’.
(c) EFFECTIVE DATE.—The amendments made by this section
shall apply to payments made after December 31, 2011.
SEC. 9007. ADDITIONAL REQUIREMENTS FOR CHARITABLE HOSPITALS.
(a) REQUIREMENTS Tont-size: 10px;">
O QUALIFY AS SECTION 501(C)(3) CHARITABLE
HOSPITAL ORGANIZATION.—Section 501 of the Internal Revenue
Code of 1986 (relating to exemption from tax on corporations,
certain trusts, etc.) is amended by redesignating subsection (r)
as subsection (s) and by inserting after subsection (q) the following
new subsection:
‘‘(r) ADDITIONAL REQUIREMENTS FOR CERTAIN HOSPITALS.—
‘‘(1) IN GENERAL.—A hospital organization to which this
subsection applies shall not be treated as described in subsection
(c)(3) unless the organization—
‘‘(A) meets the community health needs assessment
requirements described in paragraph (3),
‘‘(B) meets the financial assistance policy requirements
described in paragraph (4),
‘‘(C) meets the requirements on charges described in
paragraph (5), and
‘‘(D) meets the billing and collection requirement
described in paragraph (6).
‘‘(2) HOSPITAL ORGANIZATIONS TO WHICH SUBSECTION
yle="text-align:left;">
APPLIES.—
Applicability.
26 USC 501.
26 USC 6041
So you are saying the IRS is wrong? Direct from their website, which I already linked for you.
Affordable Care Act: Questions and Answers on Over-the-Counter Medicines and Drugs
1. How are the rules changing for reimbursing the cost of over-the-counter medicines and drugs from health flexible spending arrangements (health FSAs) and health reimbursement arrangements (HRAs)?
A. Section 9003 of the Affordable Care Act established a new uniform standard for medical expenses. Effective Jan. 1, 2011, distributions from health FSAs and HRAs will be allowed to reimburse the cost of over-the-counter medicines or drugs only if they are purchased with a prescription. This new rule does not apply to reimbursements for the cost of insulin, which will continue to be permitted, even if purchased without a prescription.
2. How are the rules changing for distributions from health savings accounts (HSAs) and Archer Medical Savings Accounts (Archer MSAs) that are used to reimburse the cost of over-the-counter medicines and drugs?
A. In accordance with Section 9003 of the Affordable Care Act, only prescribed medicines or drugs (including over-the-counter medicines and drugs that are prescribed) and insulin (even if purchased without a prescription) will be considered qualifying medical expenses and subject to preferred tax treatment.
3. When will the changes become effective?
A. The changes are effective for purchases of over-the-counter medicines and drugs without a prescription after Dec. 31, 2010. The changes do not affect purchases of over-the-counter medicines and drugs in 2010, even if they are reimbursed after Dec. 31, 2010.
4. How do I prove that I have purchased an over-the-counter medicine or drug with a prescription so that I can get reimbursed from my employer's health FSA or an HRA?
A. If your employer’s health FSA or HRA reimburses these expenses, you would provide the prescription (or a copy of the prescription or another item showing that a prescription for the item has been issued) and the customer receipt (or similar third-party documentation showing the date of the sale and the amount of the charge). For example, documentation could consist of a customer receipt issued by a pharmacy that reflects the date of sale and the amount of the charge, along with a copy of the prescription; or it could consist of a customer receipt that identifies the name of the purchaser (or the name of the person for whom the prescription applies), the date and amount of the purchase and an Rx number.
5. How does this change affect over-the-counter medical devices and supplies?
A. The new rule does not apply to items for medical care that are not medicines or drugs. Thus, equipment such as crutches, supplies such as bandages, and diagnostic devices such as blood sugar test kits will still qualify for reimbursement by a health FSA or HRA if purchased after Dec. 31, 2010, and a distribution from an HSA or Archer MSA for the cost of such items will still be tax-free, regardless of whether the items are purchased using a prescription.
6. Will I need a prescription to use my health FSA, HRA, HSA or Archer MSA funds for insulin purchases after Dec. 31, 2010?
A. No. You can continue to use your health FSA, HRA, HSA or Archer MSA funds to purchase insulin without a prescription after Dec. 31, 2010.
7. I use health FSA funds for my co-pays and deductibles. Will I still be able to reimburse those expenses with health FSA funds after Dec. 31, 2010?
A. Yes. Co-pays and deductibles continue to be reimbursable from a health FSA after Dec. 31, 2010. Similarly, funds from an HRA can continue to be used for these expenses and a distribution from an HSA or Archer MSA for these purposes will be tax-free.
8. My company gives me two extra months beyond the end of the year to submit claims for health FSA expenses incurred during the year. What happens if I purchase over-the-counter medicines or drugs without a prescription in 2010 but do not submit the claim for those expenses until January 2011? Will they qualify for reimbursement?
A. Yes. The new restriction on plan reimbursements for the cost of over-the-counter medicines or drugs without a prescription applies only to purchases that are made after 2010.
9. My company’s health FSA includes a provision for a grace period, so that if I don’t spend all of the money in my health FSA by Dec. 31 in a given year, I can still use the amount left in my health FSA at the end of the year to reimburse expenses I incur during the first 2 ½ months of the following year. If I buy over-the-counter medicines or drugs without a prescription during the 2 ½ month grace period of 2011, can I still use the amount left in my health FSA at the end of 2010 to reimburse those expenses?
A. No. The change applies to purchases made on or after Jan. 1, 2011. Thus, even if your employer’s plan includes the 2 ½ month grace period provision, the cost of over-the-counter medicines and drugs purchased without a prescription during the first 2 ½ months of 2011 will not be eligible to be reimbursed by a health FSA.
10. If my health FSA or HRA issues a debit card that I use to pay for over-the-counter medicines or drugs, will I still be able to use the card to purchase over-the-counter medicines or drugs after Dec. 31, 2010?
A. Generally, yes, if you have a prescription for the medicine or drug. For expenses incurred in 2010, you may continue to use an FSA or HRA debit card to purchase over-the-counter medicines or drugs (whether or not you have a prescription) at pharmacies and from mail order and web-based vendors that sell prescription drugs. Starting after Jan. 15, 2011, you may continue to use an FSA or HRA debit card to purchase over-the-counter medicines or drugs at these vendors, so long as you obtain a prescription for the medicine or drug, the prescription is presented to the pharmacist, and the medication is dispensed by the pharmacist and given an Rx number.
For further information, including guidance on purchases of over-the-counter medicines and drugs from health care providers other than pharmacies and mail order and web-based vendors (such as physicians or hospitals), see IRS Notice 2011-5. For guidance on debit card purchases at “90 percent pharmacies,” see IRS Notice 2010-59.
11. The ACA removed over-the-counter medicines and drugs from the list of reimbursable qualified medical items if purchased without a prescription. If you have an HSA, Archer MSA, health FSA, or HRA, how will the change in the law affect reporting on Form W-2? Do the reimbursements for items that are not qualified medical expenses need to be included as taxable wages on employees’ Forms W-2?
A. If you have an HSA or an Archer MSA, distributions for expenses that are not qualifying medical expenses (including over-the-counter medicines and drugs purchased without a prescription) will be included in your gross income and subject to an additional tax of 20%. The income tax and additional tax are reported on Form 8889 for an HSA distribution and on Form 8853 for an Archer MSA distribution. You complete these forms and attach them to your Form 1040 when you file your income tax return. Distributions from an HSA or an Archer MSA are not included as taxable wages and do not affect your Form W-2.
