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Guidance explaining 2011 changes to flexible spending arrangements.

The IRS has issued guidance reflecting statutory changes regarding the use of certain tax-favored arrangements, such as flexible spending arrangements, to pay for over-the-counter medicines and drugs.

The Affordable Care Act, enacted in March, established a new uniform standard that, effective Jan. 1, 2011, applies to flexible spending arrangements and health reimbursement arrangements. Under the new standard, the cost of an over-the-counter medicine or drug cannot be reimbursed from the account unless a prescription is obtained. The change does not affect insulin, even if purchased without a prescription, or other health care expenses such as medical devices, eye glasses, contact lenses, co-pays and deductibles.

The new standard applies only to purchases made on or after Jan. 1, 2011, so claims for medicines or drugs purchased without a prescription in 2010 can still be reimbursed in 2011, if allowed by the employer's plan.

Learn more at www.calcpa.org/FSAguidance.

brightspot

Hiring in accounting and finance is expected to increase in the fourth quarter--the first increase since the first quarter of 2009 survey. Read more at www.calcpa.org/hire.
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Title Annotation:IRS NEWS
Publication:California CPA
Date:Oct 1, 2010
Words:179
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