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DAVID MARTIN AGENCY, INC. <br />• Over the counter medications cannot be reimbursed under the medical FSA until the <br />statutory minimum annual health plan deductible is satisfied. For 2011, this is $1,200/single <br />and $2,400/family, unchanged for 2012. Health care reform narrowed the definition of a <br />qualified medical expense. Effective 1/1/2011, amounts for medicines or drugs (other than <br />insulin) will be qualified medical expenses only if the medicines or drugs are "prescribed <br />drugs' even if they could be obtain legally without a prescription. <br />• HSA holders can still fully participate in the non-medical components of a flex plan including <br />dependent day care and premium conversion. <br />• HSAs are not available to members eligible for a spouse's general purpose FSA. <br />Q: What about HSA distributions? <br />A: Only qualified medical expenses are reimbursed from the HSA tax-free. They include both: <br />• Expenses that count toward the health plan deductible. For example: <br />Section 213 (d) -same expenses as those qualified under an FSA (see attached <br />list) <br />o Expenses for medical care paid for the diagnosis, cure, mitigation, treatment, or <br />prevention of disease. Effective 1/1/2011, nonprescription drugs would need to <br />be obtained with a prescription in order to be reimbursed tax-free. <br />• Expenses that do not count towards health plan deductible. For example: <br />o Vision and dental expenses <br />o Qualified over the counter medications. Health care reform narrowed the <br />definition of a qualified medical expense. Effective 1/1/2011, amounts for <br />medicines or drugs (other than insulin) will be qualified medical expenses only if <br />the medicines or drugs are "prescribed drugs" even if they could be obtained <br />legally without a prescription. <br />o Ctualified long-term care services and long-term care insurance <br />o Mileage to and from medical appointments (19C per mile for 2011) <br />o Upon termination of employment, COBRA premiums and health insurance <br />premiums while collecting unemployment compensation are also qualified <br />medical expenses <br />o Medicare Part A, B and D premiums, Medicare HMO (Medicare Advantage), or <br />retiree health care coverage under an employer-sponsored plan for individuals <br />age 65 and older. Premiums for Medicare supplemental policies, however, are <br />not qualified medical expenses. <br />CONFIDENTIAL. PAGE S <br />