American Fidelity Health Care Reform Update
Changes from American Fidelity
In a continuing effort to educate your Section 125 Flexible Spending Account participants on upcoming changes to their Unreimbursed Medical Account and the passage of the Health Care Reform law (Affordable Care Act), a third communication was distributed to participants via email over the last couple of days (attached below). We will also be mailing letters to participants without email addresses on file. Please take a moment to read over this notification, which is similar to previous communication this year.
If you have any questions at all, please feel free to contact your American Fidelity Account Representative, or our Flex Administration Team at 800-325-0654. Thank you.
Important Changes to Your Unreimbursed Medical Expense Account
(11/2010)
On January 1, 2011, American Fidelity Assurance Company will adjust how we reimburse over–the–counter drugs and medicines inside an Unreimbursed Medical Expense Account (also known as Health FSA). These changes are due to the passage of the health care reform law (Affordable Care Act).
Included in the law are new requirements that will affect your Unreimbursed Medical Expense Account. Below is an overview of these requirements and when the changes will be implemented.
Over–the–Counter Drugs and Medicines:
Effective January 1, 2011, in order to be reimbursed for over–the–counter drugs and medicines purchased on or after this date, the participant must provide a medical practitioner's prescription for the item(s). American Fidelity will require a new prescription be submitted, as we will not be able to use any information that may have been previously provided (doctor's statements will no longer be accepted). The prescription must be legible and will be valid for one year from the date of issue. It must include the same information as required for a drug or medicine that is available by prescription only.
This normally includes:
1) The name and address of the patient;
2) The name and quantity of the drug prescribed and directions for use;
3) The date of issue;
4) The name, address, and phone number of the prescriber, his or her license classification, and his or her federal registry number;
5) A description of the condition for which the drug is being prescribed;
6) The signature of the medical practitioner issuing the order.
The prescription requirement will not apply to over–the–counter items that do not fall into the category of drug or medicine (such as bandages, reading glasses, sunscreen, hot/cold packs, hearing aid batteries, etc.). Because of the new requirement, participants should carefully calculate the amount of contributions placed into the Unreimbursed Medical Expense Account for over–the–counter items. The Internal Revenue Service will not allow the participant to change their election as a result of this new requirement.
Examples of affected items that will require a prescription include:
• Acid Controllers
• Allergy & Sinus
• Antibiotic Products
• Anti–Diarrheals
• Anti–Gas
• Anti–Itch & Insect Bites
• Antiparasitic Treatments
• Baby Rash Ointments/Creams
• Cold Sore Remedies
• Cough, Cold & Flu
• Digestive Aids
• Feminine Anti–Fungal/Anti–Itch
• Hemorrhoidal Preparations
• Laxatives
• Motion Sickness
• Pain Relief
• Respiratory Treatments
• Sleep Aids & Sedatives
• Stomach Remedies
The new law does not affect eligible medical expenses that are not considered over–the–counter drugs or medicines, such as prescription drugs, co–pays, deductibles, prescription eyeglasses or contact lenses, orthodontia, etc. It also does not apply to reimbursements for the cost of insulin, which will continue to be allowed even if purchased without a prescription.
Flex Debit Cards:
For participants whose employer offers a flex debit card, there will be a significant change in how the card works. The Special Interest Group for IIAS Standards (SIGIS) has stated that over–the–counter medicines‚ drugs and biological treatments that require a prescription would be deleted from the list of eligible items.
Therefore‚ if a flex debit card is being used to purchase an over–the–counter item that requires a prescription‚ the card will decline the purchase. The participant can manually submit the receipt‚ voucher and medical practitioner’s prescription to American Fidelity to be reimbursed.
Coverage for Adult Children:
The Internal Revenue Service has made an exception to allow the pre–taxation of employer sponsored health coverage on adult children who have not reached age 27 by the end of the tax year. This will also allow for participants in Unreimbursed Medical to be reimbursed for eligible medical expenses incurred for these individuals. The adult children do not need to be full–time students or tax dependents and marital status is not considered. Claims for dependents of the adult children would not be eligible for reimbursement. This change can be retroactive up to March 30, 2010.
Please feel free to contact your Flex Administration Team at 800–325–0654 with any questions regarding these changes.
As a new law, the Affordable Care Act is expected to be clarified by guidance from agencies such as the Internal Revenue Service and Department of Health and Human Services and its interpretation may change. This notification reflects our best understanding of the law on the date of its distribution. Any further clarification affecting Section 125 Plans will be communicated to our customers as it becomes available.
www.afadvantage.com 800–325–0654
