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HEADACHE? STUFFY NOSE? IRS SAYS CAFETERIA PLANS CAN HELP!
October 31, 2003
The IRS has opened the door for cafeteria plans to pay costs of over-the-counter medication (Rev. Rul. 2003-102).
Many employers sponsor cafeteria plans - also known as "Section 125 plans" or "flex plans." Such plans allow employees to have part of their compensation withheld before tax to pay for the employee share of health insurance and other benefits. Employers like such plans because they don't pay social security taxes on the withheld portions.
Many such plans feature a "flexible spending account." Employees have money withheld pre-tax for out-of-pocket medical expenses; the plan reimburses the employees tax-free for documented out-of-pocket health costs.
The IRS now says these reimbursements can be made for over-the-counter remedies, such as cold pills and aspirin. Dietary supplements don't qualify, though.
Now to convince the IRS of the health benefits of wine and beer...
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