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DEPARTMENT OF FINANCIAL MANAGEMENT <br /> RISK MANAGEMENT DIVISION <br /> MEMORANDUM NO. 2011-11 <br /> June 14, 2011 <br /> TO: Honorable Mayor Michael T. McElroy and City Council <br /> FROM: Ryan McCrady, City Manager <br /> Ron Neufeld, Director of Financial Management <br /> Scott Clark, Risk Manager <br /> SUBJECT: FLEXIBLE SPENDING ACCOUNT AMENDMENT <br /> SUMMARY RECOMMENDATION: <br /> It is recommended by staff that City Council approve the attached resolution, which will <br /> amend the City's FSA Plan to be in compliance with the changes required by the Patient <br /> Protection and Affordable Care Act. <br /> BACKGROUND: <br /> The Patient Protection and Affordable Care Act added Section 106(fl to the Internal <br /> Revenue Code that only allows reimbursement of medical expenses for medicines and <br /> drugs only if(1)the medicine or drug requires a prescription, (2) is available without a <br /> prescription(an over-the-counter medicine or drug) and the individual obtains a <br /> prescription, or is (3) insulin. The effective date of the amendment to the plan is January <br /> 1, 2011. <br /> The IRS has not published the new regulations to provide for the new definition of <br /> medical expenses but plan sponsors are required to amend their plans no later than June <br /> 30, 2011. During the FSA enrollment in December 2010 all participants were provided <br /> information about the changes to the over-the-counter medications. The change to the <br /> over-the-counter medicines and drugs do not apply to items that are not medicines or <br /> drugs, including equipment such as crutches, supplies such as bandages, and diagnostic <br /> devices such as blood sugar tests kits. <br /> POTENTIAL OBJECTIONS: <br /> There are no known objections. <br /> STAFF REFERENCE: <br /> Ron Neufeld, Director of Financial Management Telephone: 424-2702 <br /> Scott Clark, Risk Manager Telephone: 424-2803 <br /> BUDGET IMPACT: <br /> There are no budget or time implications. <br />