On Thursday, December 23, 2010, the IRS issued Notice 2011-5, which clarifies the rules for when a Health FSA or Health Reimbursement Arrangement (HRA) may reimburse prescribed over-the-counter (OTC) medicine or drugs.
Effective January 1, 2011, certain employers that establish “simple cafeteria plans” are exempt from the Code Section 125 nondiscrimination requirements as well as the non-discrimination requirements applicable to the plans offered through the cafeteria plan (e.g. Code Section 129 non-discrimination testing for dependent care FSAs, Code Section 105(h) non-discrimination testing for self-insured medical plans, etc).
The good news is that the new SIMPLE cafeteria plan regulations provide for a "safe harbor" from non-discrimination testing requirements for small employers that allow employees to contribute to health insurance premiums on a pre-tax basis.
In response to new IRS guidance issued on Friday, September 3, 2010, the organization that manages the IIAS standard, SIGIS, is making significant changes to its Eligible Products List . The guidance, issued by the IRS in Notice 2010-59 in response