Albuquerque New Mexico Accounting Tax Accountant and Forensic CPA - Affordable Care Act changes that may impact Healthcare Savings Programs

Dianne Goodman, CPA, FCPA
Comprehensive Small Business Solutions, PC
Business Accounting and Taxes, Individual Taxes and Forensic Services-Elder Abuse, Divorce and Business Fraud
1-888-851-1975 Toll Free or (505) 323-2307 in Albuquerque NM

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FOR IMMEDIATE RELEASE:

AFFORDABLE CARE ACT CHANGES THAT MAY IMPACT HEALTHCARE SAVINGS PROGRAMS

The Affordable Care Act of 2010 makes some changes to healthcare programs offered by employers. If you participate in any of these programs, here's what you should know about using your 2010 funds and planning for 2011.

Beginning Jan. 1, 2011, over-the-counter (OTC) drugs, like nonprescription pain relievers, will be reimbursable through healthcare programs like flexible spending arrangements or health reimbursement arrangements only if the OTC drugs are prescribed. Also, OTC drugs will no longer be a qualified medical expense after Dec. 31, 2010, unless you have a prescription. This means that a distribution from a Health Savings Account or Archer Medical Saving Account for an OTC drug will be tax-free only if it is prescribed.

This is effective for all OTC purchases made on or after Jan. 1, 2011-even if the funds were set aside in 2010. This change does not affect eligible OTC drug purchases made on or before Dec. 31, 2010.

In addition, the additional tax for distributions from Health Savings Accounts for non-qualified medical expenses increases from 10 to 20 percent and from 15 to 20 percent for Archer Medical Savings Accounts in 2011.

There are different types of healthcare programs that offer certain income tax advantages and offset the cost of healthcare.

Tax-favored healthcare programs include:

Health Savings Accounts (HSAs)

Archer Medical Savings Accounts (Archer MSAs)

Health Flexible Spending Arrangements (FSAs), and

Health Reimbursement Arrangements (HRAs)

Consider the changes when you set aside money for your 2011 healthcare account.

Go to YEAR END TAX PLANNING FOR INDIVIDUALS for more details on what you can do to prepare your personal taxes for year end.

These are just some tax tips you should consider when thinking about your tax planning.

This article was intended to provide general information about tax planning. It does not contain all the rules and exceptions that may apply to your situation. If you have further questions regarding year end tax planning, I can be reached at www.dgoodmancpa.com.

About the Author

Dianne Goodman, CPA, FCPA - Specializes in servicing Small Businesses and Individuals. Visit www.dgoodmancpa.com for relevant and current information on a variety of financial and tax issues focusing on small businesses and individuals or call at 1-888-851-1975.

CONTACT INFORMATION:

Dianne Goodman, CPA, FCPA
Comprehensive Small Business Solutions, PC
505 323-2307
1 888-851-1975 toll free
www.dgoodmancpa.com