The January 1, 2009 deadline for bringing health flexible spending accounts (“health FSAs”) into compliance with the IRS’s new debit card rules has been extended to July 1, 2009

In short, in 2007, the IRS issued guidance stating that, starting on January 1, 2009, participants could use health FSA debit cards to pay for eligible expenses at certain types of stores. Specifically, if a store falls within a pre-determined category code of "drug stores and pharmacies merchant", a health FSA debit card could be used in that store only if (i) the store participates in a type of inventory information approval system described by the IRS in already-issued guidance or (ii) at least 90% of the store’s gross receipts (determined on a store by store basis) during the prior tax year consisted of items which qualify as deductible medical expenses on a personal income tax return (including certain types of nonprescription medications). Participants may now continue using health FSA debit cards under the old rules until June 30, 2009. Then, starting as of July 1, 2009, the IRS’s new debit card rules will apply.

If you have any questions or need assistance in evaluating your company’s health FSA or benefit arrangements, please contact  the Tucker Arensberg attorney with whom you regularly work.

Employee Benefits Law Group: The  Employee Benefits Law Group at Tucker Arensberg, P.C. has a diverse client base of private and public employers.  We are dedicated to working with our clients to resolve complicated legal issues in a practical, common-sense and cost-efficient manner.  In doing so, we routinely work with our clients to design, establish, implement, administer, and terminate many different types of employee benefit plans. Refer to for more information on the Employee Benefits Law Group.

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