Travis Software Official Blog

ObamaCare changed the future landscape of healthcare, but one change that is currently in effect is that a group health plan or health insurance issuer that offers group health insurance coverage must make dependent coverage of children available until a child’s attainment of 26 years of age. Specifically, for plan years beginning on and after January 1, 2011, a group health plan must provide health coverage for employees’ children until the child turns 26.

In 2010, the IRS issued Temporary Regulations regarding the coverage requirement. Travis Software usually does not make changes based upon temporary regulations, however, we received customer suggestions to incorporate this new change and felt it appropriate considering all of the attention ObamaCare is getting.

We here at Travis know that this time of year is especially busy for some of our TravisFlex system users, and wanted to remind you of how to utilize some of the system functions available for Year End Processing. We also wanted to take this opportunity to inform you of a few upcoming legislative changes regarding Flexible Spending Accounts (FSAs).

For our TravisFlex customers that utilize the Evolution Debit Card module, this recent guidance by the IRS is important information.

The IRS recently announced that health flexible spending arrangements (FSAs) and health reimbursement arrangements (HSAs) may continue to utilize debit cards for the purchase of prescribed over-the-counter medications and drugs. IRS Notice 2011-5 represents a change in position, because the IRS had previously issued a notice prohibiting the use of health FSA and HRA debit cards for purchases of over-the-counter medicines or drugs. As you may be aware, effective on and after January 1, 2011, distributions from health FSAs and HRAs will be allowed to reimburse the cost of over-the-counter medicines or drugs only if they are purchased with a prescription (except for insulin). For purposes of this Notice, a “prescription” means a written or electronic order for a medicine or drug that meets the legal requirements of a prescription in the state in which the medical expense is incurred and that is issued by an individual who is legally authorized to issue a prescription in such state.

Last week, Travis reported that the IRS released informal guidance regarding the proper procedure to claim credit for an ARRA premium subsidy on IRS Form 941. Through an email authored by a senior IRS Analyst, the IRS clarified that the ability to claim credit for the COBRA premium subsidy is based on the date that the COBRA premium payment is received, not the time period to which such credit is applied.

A senior tax analyst for the Internal Revenue Service (“IRS”) recently clarified how to properly claim the payroll tax credit on Form 941 for the ARRA premium subsidy. Through an informal announcement, the IRS agent stated that the ability to claim the credit for the premium subsidy is based on the year in which the payment is received rather than the year the payment is applied. The agent further stated that the date on which the employer is informed of a payment received is not at issue, but only when the payment was actually received.