Human Resources

Tell Staff About Health-Care Changes

Tell employees about new requirements under new health-care legislation.

November 10, 2010
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New requirements under The Patient Protection and Affordable Care Act state that over-the-counter drugs purchased after Dec. 31, 2010, now require a prescription in order to be eligible for reimbursement from a health flexible spending account (FSA), health reimbursement account (HRA), health savings account, or Archer medical savings account.

Credit union employers need to communicate these changes to employees.

According to new Internal Revenue Service (IRS) guidance issued Sept. 3, 2010, a medicine or drug is only eligible for tax-free payment or reimbursement by an employer-provided plan (including a health FSA or HRA) if the medicine or drug requires a prescription, is an over-the-counter medicine or drug and the individual obtains a prescription, or is insulin.

These changes are effective for expenses incurred after Dec. 31, 2010, regardless of whether the credit union’s plan is fiscal or calendar year or whether there’s no plan year (or other coverage period in the case of an HRA), and regardless of any applicable grace period for a health FSA.

The IRS notice makes clear that employees do not need a prescription for over-the-counter items that aren’t medicines or drugs. This includes items such as crutches, bandages, and diagnostic devices (e.g., blood sugar test kits).

These items can qualify for medical care if they otherwise meet the tax code’s definition of medical care, which includes “expenses for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body.”

However, expenses for items that are merely beneficial to the general health of an individual, such as a vacation expenditure, don’t qualify as expenses for medical care.

Rules for debit cards

Another change credit union employees should keep in mind is that in most cases FSA and HRA debit cards cannot be used to purchase over-the-counter drugs, effective Jan. 1, 2011.

Current debit card systems aren’t capable of recognizing and substantiating that such drugs were prescribed.

These medicine or drug purchases must be substantiated before reimbursement may be made. Employees are required to submit the prescription and receipt, or a receipt issued by a pharmacy which identifies the name of the purchaser (or the name of the person for whom the prescription applies), the date and amount of the purchase, and a prescription Rx number.

Debit cards may continue to be used for medical expenses other than over-the-counter medicines or drugs.

For more information

For more information, consult a legislative brief containing detailed information regarding these changes and answers to many questions related to healthcare reform.

Please contact me if you have questions or need assistance communicating the new requirements to credit union employees.

BRAD PRICER is employee benefits product leader for CUNA Mutual Group. Contact him at 800-356-2644, ext. 6786.

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Great article! Unfortunately, most employees don’t feel valued or appreciated by their supervisors or employers. In fact, research has shown that the predominant reason team members quit their jobs is because they don’t feel valued. This is in spite of the fact that employee recognition programs have proliferated in the workplace – over 90% of all organizations in the U.S. has some form of employee recognition activities in place. But most employee recognition programs are viewed with skepticism and cynicism – because they aren’t viewed as being genuine in their communication of appreciation. Getting the “employee of the month” award, receiving a certificate of recognition, or a “Way to go, team!” email just don’t get the job done. How do you communicate authentic appreciation? We have found people have different ways that they want to be shown appreciation, and if you don’t communicate in the language of appreciation important to them, you essentially “miss the mark”. Additionally, employees need to receive recognition more than once a year at their performance review. Otherwise, they view the praise as “going through the motions”. A third component of authentic appreciation is that the communication has to be about them personally – not the department, not their group, but something they did. Finally, they have to believe that you mean what you say. How you treat them has to match the words you use. If you are not sure how your team members want to be shown appreciation, the Motivating By Appreciation Inventory ( will identify the language of appreciation and specific actions preferred by each employee. You then can create a group profile for your team, so everyone knows how to encourage one another. Remember, employees want to know that they are valued for what they contribute to the success of the organization. And communicating authentic appreciation in the ways they desire it can make the difference between keeping your quality team members or having a negative work environment that everyone wants to leave. Paul White, Ph.D., is the co-author of The 5 Languages of Appreciation in the Workplace with Dr. Gary Chapman.

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