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IRS Addresses Medical Expense Reimbursements Related to Ancestry Genetic Testing Services

In Private Letter Ruling 201933005 (the “PLR”), the IRS recently addressed whether certain genetic testing services and reports provided to an individual by a commercial retailer of bundled ancestry and health evaluation services (“Ancestry Provider”) constituted “medical care” expenses under Section 213(d) of the Internal Revenue Code, which would be reimbursable to the individual from his or her employer-sponsored health flexible spending arrangement (“HFSA”). Under the facts of the PLR, the Ancestry Provider (i) collected a DNA sample from an individual through a DNA testing kit, (ii) sent the sample to a third-party laboratory for genetic testing, and (iii) issued reports to the individual with results from such laboratory testing, including, among other things, information regarding the individual’s potential health risks. The IRS concluded that because the Ancestry Provider’s bundled services included both non-medical (i.e., ancestry) as well as health services, the costs of its services must be valued and… Continue Reading

Revised Data Security Standards for Payment Cards

The Payment Card Industry Security Standards Council recently released revised data security standards for payment cards, which include debit cards issued by vendors in conjunction with flexible spending accounts, health reimbursement arrangements, and health savings accounts. These revised standards update the Payment Card Industry Data Security Standard (“PCI DSS”) to version 3.2 and contain a variety of enhancements to protect against security threats, including revised system penetration testing requirements, enhanced policies and procedures for detecting failures, and stricter authentication protocols. The PCI DSS responsibilities fall on the card issuers, vendor service providers, merchants, etc., not on an employer which merely sponsors or facilitates a spending account benefit that utilizes debit cards. PCI DSS version 3.2 will be viewed as a “best practice” until January 31, 2018. Beginning February 1, 2018, version 3.2’s standards become mandatory for the industry. Employers sponsoring or facilitating spending account benefits utilizing debit cards should update… Continue Reading

IRS Modifies “Use-It-Or-Lose-It” Rule for Health Flexible Spending Arrangements

Notice 2013-71 modifies the “use-it-or-lose-it” rule for health flexible spending arrangements (“FSAs”) by allowing plan sponsors to amend their cafeteria plan and FSA documents to allow a participant to carry forward into the next year up to $500 of any amount remaining in the participant’s FSA at year-end.  Under the “use-it-or-lose-it” rule, all unused amounts remaining in a participant’s FSA had to be forfeited at the end of the year.  This new carryover option is an alternative to the grace period that is currently allowed (but only if the plan document includes a grace period feature).  Plan sponsors may amend their plans and FSAs to allow for a carryover from the 2013 to 2014 plan year, provided that (1) a grace period feature is not already included (or is removed), (2) the amendment is signed by the end of the 2014 plan year, and (3) participants are timely notified of… Continue Reading

October 2019
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