Deadline to Amend U.S. Cafeteria Plan Documents Quickly Approaching

June 15, 2011

The Patient Protection and Affordable Care Act, as modified by the Health Care and Education Reconciliation Act (the "Act") requires plan sponsors to amend their cafeteria plans, including medical flexible spending accounts ("FSAs"), health reimbursement arrangements ("HRAs"), health savings accounts ("HSAs"), and Archer medical savings accounts ("Archer MSAs"), with respect to reimbursements for the purchase of over-the-counter drugs by no later than June 30, 2011.

Effective January 1, 2011 (and January 16, 2011 with respect to debit card transactions), the Act prohibits FSAs, HRAs, HSAs, and Archer MSAs from reimbursing plan participants for the purchase of over-the-counter drugs, unless the participant has obtained a prescription for such drugs or is purchasing insulin.  Over-the-counter expenses for non-drug items such as crutches, bandages, and blood sugar test kits may continue to be reimbursed without a prescription.

Plan sponsors must retroactively amend their plan documents within in the next two weeks to reflect this prohibition. Plan sponsors may also need to amend their plans to reflect other provisions of the Act, such as revising plan definitions of "dependent" to cover adult children up to age 26.

  Gibson, Dunn & Crutcher LLP

If you would like assistance in reviewing and amending your plan documents, please contact David Schiller (214-698-3205, [email protected]) or Krista Hanvey (214-698-3425, [email protected]) in the firm’s Dallas office or one of our other Gibson Dunn employee benefits partners listed below.  

Stephen W. Fackler – Palo Alto (650-849-5385, [email protected])
Michael J. Collins – Washington, D.C. (202-887-3551, [email protected])
Sean Feller – Los Angeles (213-229-7579, [email protected])

© 2011 Gibson, Dunn & Crutcher LLP

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