HOW HEALTH CARE REFORM AFFECTS YOUR FSA, HRA, or HSA

On March 23, 2010, President Barack Obama signed into law the Patient Protection and Affordable Care Act (H.R. 3590). This comprehensive health care reform legislation will have significant implications as it is phased in over the next few years. As the legislation currently stands, Flexible Spending Accounts (FSAs), Health Savings Accounts (HSAs) and Health Reimbursement Accounts (HRAs) will be affected as well.

Over-The-Counter Medicines - beginning with the 2011 plan year (for calendar-year plans), the costs of over-the-counter medicines will no longer be eligible for reimbursement from a Health Care Flexible Spending Account (HCFSA), a Health Savings Account (HSA), or a Health Reimbursement Arrangement (HRA) unless obtained with a prescription.

Health Savings Accounts - beginning in 2011, the tax penalty on withdrawals from Health Savings Accounts (HSAs) for reasons other than the reimbursement of qualified medical expenses will double to 20%.

Limit on Health Care Flexible Spending Accounts (HCFSAs) - Beginning with the 2013 plan year (for calendar-year plans), contributions to a Health Care Flexible Spending Account (HCFSA) will be capped at $2,500 per year, indexed to the CPI.

Of course, changes to the legislation is expected and EBS/Atlanta will make every effort to keep you apprised. We urge you to contact your Congressional Representatives and Senators.

New Ratings for America’s Hospitals Now Available on Hospital Compare Web Site
Individual Rates Provided on More Than 4,000 Hospitals Nationwide,
New Mortality and Readmission Data Included

On Thursday, July 9, important new information was added to the Centers for Medicare & Medicaid Services’ (CMS) Hospital Compare Web site that reports how frequently patients return to a hospital after being discharged, a possible indicator of how well the facility did the first time around. The site is www.hospitalcompare.hhs.gov

On average, 1 in 5 Medicare beneficiaries who are discharged from a hospital today will re-enter the hospital within a month. Reducing the rate of hospital readmissions to improve quality and achieve savings are key components of President Obama’s health care reform agenda. “The President and Congress have both identified the reduction of readmissions as a target area for health reform,” said HHS Secretary Kathleen Sebelius. “When we reduce readmissions, we improve the quality of care patients receive and cut health care costs.” With the update announced on July 9, Hospital Compare will provide better data on the previously posted mortality rates for individual hospitals, as well as the new data on 30-day readmissions for heart attack, heart failure, and pneumonia. Previously, Hospital Compare had provided only mortality rates for these three conditions.

Consumers have relied on Hospital Compare since 2005 to provide information about the quality of care provided in over 4,700 of America’s acute-care hospitals. In 2008 alone, Hospital Compare had over 18 million page views, and has received about 1 million page views each month of 2009 thus far.

Stimulus Law Includes a Temporary Increase in the Income-Tax Exclusion for Transportation Benefits

The American Recovery and Reinvestment Act of 2009, signed by President Obama on February 17, 2009, includes a temporary increase in the income-tax exclusion for transportation benefits. This provision of the law is intended to help employees with their commuter expenses.

Background
Qualified transportation benefits, including transit passes, parking, vanpooling and bicycling expenses, can be excluded from income under Section 132 of the Internal Revenue Code. Transit, parking and vanpooling expenses are subject to a maximum exclusion, which is indexed annually. For tax years beginning on January 1 2009, the maximum exclusion for qualified parking expenses was $230 per month, and $120 per month for mass transit and vanpooling (combined).

Transportation Benefits Affected
The temporary income-tax exclusion bill affects transit passes and expenses associated with vanpooling in 2009 by increasing the $120 per month maximum exclusion for such items to equal the $230 per month exclusion for parking. In 2010, the dollar amounts for each benefit may increase, depending on any inflation adjustment. The increase in the exclusion does not affect the qualified bicycle commuting reimbursement.

Effective and Termination Dates
The temporary increase in the income-tax exclusion for transit passes and vanpooling will take effect starting March 1, 2009. It is scheduled to terminate for months beginning after December 31, 2010.

IRS INCREASES MILEAGE RATES
JULY 1, 2008 THROUGH DECEMBER 31, 2008
The Internal Revenue Service is revising the optional standard mileage rate for computing deductible costs of operating an automobile for medical expense purposes.  The increase in the standard mileage rates is for the final six months of 2008.  The new mileage rate is $0.27 per mile for travel to and from a doctor’s office, hospital or other provider for eligible medical expenses incurred on or after July 1, 2008.  This new rate is only effective for the last six months of 2008.  They do not apply to eligible mileage acquired before July 1, 2008.  For expenses incurred prior to July 1, 2008, the mileage rate remains at $0.19.

In recognition of the recent gasoline price increases, the IRS made this special adjustment for the final months of 2008.  The IRS normally updates the mileage rates once a year in the fall for the next calendar year.

The IRS has issued new guidelines for using FSA Debit Cards. Effective January 1, 2008, the enhancement will require that all grocery stores, discount stores, and warehouse clubs enhance their computer systems to identify those items that are eligible under the Medical Flexible Spending Account. This enhancement will mean that each time you use your Take Care Debit Card at these merchants, all items that are eligible are approved at the “point of sale”, and will not require the participant to submit receipts at a later date. Click here for more information and a full Merchant list of where FSA Debit Cards may be used.

IRS Announces 2007 Limits for Qualified Transportation Benefits
The IRS has announced the cost of living adjustments for 2007 to the dollar limits that apply to Qualified Transportation Benefits.  The limit on the monthly amount that can be excluded from income for qualified parking expenses will increase from $205 in 2006 to $215 in 2007.  The aggregate monthly limit for transit passes and/or transportation in a commuter highway vehicle (e.g., van pooling) will increase from $105 in 206 to $110 in 2007.

IRS Releases 2005 Qualified Transportation Fringe Benefits Limits
The IRS has issued the 2005 monthly limits for qualified transportation benefits (QTFBs). To reflect changes in the cost of living, the IRS each year adjusts the monthly limits for QTFBs, which include employer-subsidized parking, van pools and mass transit vouchers, passes, tokens and farecards.

IRS Releases 2005 Adoption Assistance
The IRS has issued the 2005 monthly limits for the adoption assistance exclusion and tax credit.

EBS/Atlanta will be closed on Thursday, November 25, 2004 and will reopen on Monday, November 29, 2004.

All of us at EBS/Atlanta wish you a very happy Thanksgiving.

U.S. health care costs were up 9.3% in 2002, topping out at $1.6 trillion and marking the sixth consecutive year of accelerated growth rates, according to a report released last week from the Centers for Medicare & Medicaid Services.

Spending per person averaged $5,440 in 2002, compared to $5,021 in 2001 and $4,670 in 2000. As expected, prescription drugs were the fastest-growing health care component, jumping 15% to $162.4 billion in 2002, compared to $140.8 billion in 2001, according to the report. Hospital spending increased by 9.5% to $486.5 billion in 2002. Overall, health spending grew 5.7 percentage points faster than the overall economy as measured by growth of the gross domestic product (GDP), states CMS.