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Last week, the IRS issued a notice providing guidance as to the health FSA provisions of the Heroes Earnings Assistance and Relief Tax Act that was signed into law on June 17, 2008 (the "HEART Act"). The HEART Act includes a number of
employee benefit provisions designed to soften the hardships incurred by employees who leave employment to enter into military service.
In addition to the new HEART Act guidance, the IRS has recently issued other pronouncements that allow for employee-friendly, and employer-neutral, FSA plan design changes. This Employee Benefits Alert discusses the new health FSA rules,
and the options available to employers.
Under the IRS rules, revisions to an FSA plan must generally be adopted before the plan year or other date that the change is to be made effective. Therefore, if an employer chooses to adopt any of the new FSA plan features for the 2009
calendar plan year, then an amendment to the FSA plan will need to be prepared and adopted no later than December 31, 2008.
Attached is an Employee Benefits Alert that discusses these new health FSA rules, and the options available to employers. Employers will wish to consider the implementation of these new FSA options for the upcoming plan year.
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