Seyfarth Synopsis: The Consolidated Appropriations Act, 2021 (“CAA”) contains a requirement that that group health plans may not have agreements with service providers that would restrict certain information that the plan may make available to another party (the “Gag Clause Prohibition”) and must attest on an annual basis that they are complying (the “Compliance Attestation”). After much delay, group health plans may now begin submitting their first Gag Clause Prohibition Compliance Attestation, which is due by December 31, 2023.

On February 23, 2023, the Departments of Labor, Health and Human Services, and the Treasury (the “Departments”) released new FAQs on implementing the Gag Clause Prohibition transparency requirements under the CAA. Group health plans are prohibited from entering into agreements with providers, third-party administrators (“TPAs”), pharmacy benefit managers (“PBMs”), or other service providers that that would restrict certain data and information that a plan can make available to another party.  Among other things, a plan cannot be restricted from providing provider-specific cost or quality of care information to referring providers, the plan sponsor, participants, beneficiaries, enrollees or eligible individuals.

To ensure compliance with the Gag Clause Prohibition, plans must annually submit an attestation of compliance with the law to the Departments. The Departments have now launched a website for submitting attestations and issued instructions, a system user manual, and a Reporting Entity Excel Template for plans and issuers to submit the required Compliance Attestation.

Attestation Submission Deadline

The first Gag Clause Prohibition Compliance Attestation is due by December 31, 2023, covering the more than 3-year period beginning December 27, 2020. Subsequent attestations are due by December 31 of each year thereafter.

Service Providers may Submit Attestations On Behalf of Group Health Plans

A self-insured or partially self-insured group health plan may satisfy the Compliance Attestation requirement by entering into a written agreement under which the group health plan’s service provider (such as a TPA or PBM) will attest on its behalf. However, the legal requirement to provide a timely Compliance Attestation remains with the group health plan. Thus, liability for failure to timely submit the Compliance Attestation will be enforced against the group health plan.

A health insurance issuer that both offers group health insurance and acts as a TPA for self-insured group health plans may submit a single Compliance Attestation on behalf of itself, its fully-insured group health plan policyholders, and its self-insured group health plan clients.

When the health insurance issuer of a fully-insured group health plan submits a Compliance Attestation on behalf of such plan, the Departments will consider the fully-insured group health plan and health insurance issuer to have satisfied the attestation submission requirement.

A group health plan or health insurance issuer may authorize any appropriate individual within the organization, such as the plan administrator, to attest on behalf of the plan or issuer. A service provider that has been provided the authority to make the Compliance Attestation on behalf of such plan or issuer, such as a TPA attesting on behalf of its client, may authorize any appropriate personnel within the organization to make the attestation.

Exception for Excepted Benefits and HRAs

As the Gag Clause Prohibition does not apply to excepted benefits, the FAQs provide that plans offering only excepted benefits are not required to attest, and a plan otherwise required to attest is not required to attest with respect to any excepted benefits offered. Excepted  benefits  include, among other programs, health FSAs satisfying certain conditions, certain limited-scope dental and vision coverage, and certain supplemental coverage. 

The Departments will not enforce the Compliance Attestation requirement against plans that consist solely of health reimbursement arrangements (HRAs) or other account-based plans, because the plan design of such plans precludes the need to enter into agreements with providers; thus, making it unnecessary to prohibit gag clauses. In addition, HRAs and other account-based plans are typically integrated with other coverage that either is subject to the Compliance Attestation requirements or is otherwise exempt from these requirements (such as excepted benefit HRAs). Therefore, the Departments are exercising enforcement discretion with respect to HRAs (including individual coverage HRAs) and other account-based group health plans until the Departments can exempt such plans through rulemaking.

What Should You Do With This New Guidance?

We suggest that you confirm that your existing agreements with TPAs, PBMs and other service providers do not contain language that could be deemed to violate the Gag Clause Prohibition.  In addition, if your TPA, PBM or other service provider will attest on behalf your self-funded group health plan(s), we suggest that you confirm that this obligation is set forth in a written agreement. 

Seyfarth Synopsis: As a reminder to companies with workers in Washington State, payroll tax withholding under the Washington State Long Term Care Act will begin on July 1, 2023, unless an employee qualifies for an exemption. Companies with employees in Washington will need to be ready to withhold the payroll tax and keep track of employees who are exempt from withholding.

A Quick Refresher on the Washington Cares Fund

Established under the Washington State Long Term Care Act, the Washington Cares Fund is a program that gives working Washingtonians access to long-term care coverage. Washington Cares is self-funded by worker contributions and investment earnings on those contributions. Employees in Washington who do not receive an exemption can earn a maximum of $36,500 in lifetime long-term care insurance coverage (adjusted annually for inflation) by contributing 0.58% of their wages in premiums during their working years. For more information on the Washington State Long Term Care Act, please see our blog posts here, here and here, and our Legal Update here.

Next Steps

Employers in Washington State may want to remind employees that the payroll tax withholding will begin in July and that if they want to apply for an exemption that they should do so as soon as possible. Washington Cares Fund premium payments are deducted from an employee’s paycheck until the exemption is approved, becomes effective and is provided by the employee to the employer. Exemptions become effective the quarter following approval by the State and pursuant to the law, refunds for previous contributions are not permitted.

More Information

Washington State has established a website about the Washington Cares Fund. Also, you may contact the author of this blog or your attorney if you would like more information.

Seyfarth Synopsis: In an anticipated decision, released late on Friday April 7, 2023 of the Easter weekend, Texas District Court Judge Kacsmaryk has halted the FDA’s approval of Mifepristone. While in Washington State, District Court Judge Thomas Rice granted a motion to enjoin the FDA from altering the status quo related to Mifepristone.

Mifepristone was approved by the FDA in 2000 and has been used, along with Misoprostol, to induce medication abortions ever since. More than half of the abortions in America are performed through medication (instead of surgery). We have been monitoring dueling actions filed against the FDA in Texas (asking that the FDA’s approval of Mifepristone be revoked) and in Washington (asking that the FDA remove its restrictions on the use of Mifepristone).

As a result, the outcome of these decisions would have the biggest impact on abortion rights since Dobbs overturned Roe, by potentially taking safe and effective medication abortion out of the hands of the states where the Dobbs court said it should reside.

Texas Decision

The lengthy Texas decision, released late on Friday April 7th, found the FDA rushed its approval of the drug in 2000 (a process which took 4 years) and stonewalled judicial review of its decision in the intervening years. This district court decision results in a nationwide ban on prescribing and dispensing Mifepristone.

The plaintiff in the case, the Alliance for Hippocratic Medicine incorporated itself in Amarillo, Texas shortly before filing the case in the Northern District of Texas, where Judge Kacsmaryk is the only judge. It is widely believed the plaintiffs engaged in what is known as “judge shopping” and engineered this path to secure an injunction, something Judge Kacsmaryk has bristled at.

It is expected that the FDA will appeal the decision to the Fifth Circuit within the seven-day window before the decision goes into effect.

Washington Decision

In the Washington case, plaintiffs had asked the court to affirm the FDA’s determination that Mifepristone if safe and effective, enjoin the FDA from removing the drug from the market, and remove unnecessary and burdensome restrictions added to its use in January 2023. The court found the plaintiffs had standing to bring the case and satisfied the irreparable harm standard for relief.

The court then issued a status quo preliminary injunction while the matter proceeds on the merits. As a result, the FDA is “preliminarily enjoined from altering the status or rights of the parties under the operative Mifepristone REMS Program until a determination on the merits.” However, the court declined to issue a nationwide injunction and limited the order to the “Plaintiff States”. The Plaintiff States are identified as Washington, Oregon, Arizona, Colorado, Connecticut, Delaware, Illinois, Michigan, Nevada, New Mexico, Rhode Island, Vermont, Hawaii, Maine, Maryland, Minnesota, Pennsylvania and the District of Columbia.

The dueling Federal District Court cases with opinions issued on the same day is unprecedented. Stay tuned for further developments.

Update: On June 13, 2023, the 5th Circuit issued a stay order which freezes the ruling issued by a Texas federal district court that voided the ACA requirement for health plans to cover preventive items and services (without cost-sharing) recommended by the U.S Preventive Services Task Force (USPSTF). For more information, see our blog post on the stay order here.

Seyfarth Synopsis: Following over a decade of protracted litigation over the Affordable Care Act, and several failed attempts by Congress to get rid of the ACA entirely, a Texas federal district court ruled on March 30, 2023 that the preventive care mandate under the Affordable Care Act is unconstitutional.

In a closely watched case challenging the constitutionality of the ACA’s requirement for health plans to cover certain preventive care on a first dollar basis, a Texas district court held that the requirement violates the Constitution. While the order is only two pages, Judge O’Connor stated that the “U.S. Preventive Services Task Force’s (PSTF) recommendations … violate Article II’s Appointments Clause and are therefore unlawful”. The judge found the members of the PSTF were unlawfully appointed, which voided any of their recommendations. This determination is effective immediately and retroactive to March 23, 2010.

Further, the court stated that the PrEP mandate (which covers treatment for the prevention of HIV) violates individual plaintiffs’ “rights under the Religious Freedom Restoration Act and is therefore DECLARED unlawful.” The plaintiffs had argued that coverage for PrEP drugs encouraged behavior that was against his religion, and that as a result, he could not be forced to pay for such coverage. This ruling is also effective immediately retroactive to March 23, 2010.

Preventive care that is not covered due to the PSTF recommendations, and that is not PrEP, will presumably still have to be covered. For example, preventive services recommended by the Health Resources and Services Administration including vision screening, well-baby visits, and mammograms, and those recommended by the Advisory Committee on Immunization Practices including several common vaccinations, will still be subject to the first dollar coverage requirement.

It is likely that HHS will appeal this ruling, so stay tuned for further updates.

Seyfarth Synopsis: New rules change the method of counting participants for Form 5500 purposes, possibly both eliminating audits and allowing use of the abbreviated Form 5500-SF.

On February 23, 2023, the Department of Labor released its changes to the 2023 Form 5500 filing instructions. Among the changes was a modification of the participant counting methodology for small/large plan determination from all eligible participants to only those participants with account balances at the beginning of the year.  {The end of the year in the case of the first plan year.} This counting method will push many plans, especially 401(k) and 403(b) plans, below the 100 participant audit threshold, potentially saving plan sponsors time and money.

In addition, more plans may become eligible to use Form 5500-SF instead of the more cumbersome Form 5500.

Unfortunately, the changes are not effective until the 2023 5500 filing, i.e. for plan years beginning on or after January 1, 2023, which means that the audit requirement and/or the use of Form 5500 may continue for one more year (the 2022 plan year). However, this delay provides employers that sponsor plans that are near the 100 participant account balance threshold the opportunity to make extra efforts to force out small account balances as may be permitted under the plan.  And remember that, pursuant to the SECURE Act 2.0, starting in 2024 plans can adopt rules that permit the mandatory distribution of small accounts up to $7,000 (the present limit is $5,000).  See our Legal Update on the Secure Act 2.0 for more information about those rules.

Please reach out either to the authors of this Blog Post or to your Seyfarth Employee Benefits attorney if you need additional information.

Seyfarth Synopsis: A recent decision from the Eastern District of Michigan serves as a reminder that—while courts are often quick to certify classes in ERISA cases—plaintiffs must satisfy the requirements of Rule 23 and that courts can (and do) refuse class certification where those requirements are not met.

In Davis v. Magna International of America, Inc., Plaintiffs Melvin Davis and Dakota King sought to represent a class of more than 20,000 participants in the Magna Group of Companies Retirement Savings Plan (the “Plan”), on claims broadly alleging that the Plan’s fiduciaries breached ERISA’s duties of loyalty and prudence with respect to the Plan’s investment lineup. The Court denied the motion for class certification, finding that Plaintiffs failed to satisfy the adequacy requirement for class certification under Rule 23(a).

With respect to Plaintiff Davis, the Court noted that he had pleaded guilty to federal wire fraud—a crime of dishonesty—years earlier. While Plaintiffs’ conduct and credibility would not be a focus of a bench trial involving defendants’ alleged actions, the Court found that—combined with his lack of knowledge about the case overall—Davis’s fraud conviction weighed against his adequacy as a class representative.

Turning to Plaintiff King, the Court found “concerning” King’s testimony about the quantity of prior criminal charges against him, as well as testimony that he may still owe fines related to some of those charges, and the general “vagueness about the status of his prior alcohol-related convictions.” Compounding those issues, the Court also found that certain “confusing” testimony King gave as to the circumstances surrounding his termination from Magna—while “probably not enough to find him an inadequate representative” on in its own—took on more significance when combined with his “past legal problems.”

The Court outlined a number of issues with Plaintiffs’ personal knowledge of, and commitment to, their own case. Plaintiff Davis, for example, testified that he had not read the full complaint, and—though the parties had agreed to schedule his deposition around his work schedule—Davis attended his deposition via Zoom on his cell phone, first sitting in his car in his employer’s parking lot, and later walking into a facility where other employees were present. King, for his part, was not clear on whether the case was a class action, or what his role would be as a class representative.  The Court found this knowledge to be insufficient and noted that Plaintiffs had identified no cases in which a court certified a class with representatives who were “less familiar” with the claims presented in the case, or “less prepared” to serve as class representative, than Plaintiffs.

Ultimately—based on a combination of all these factors—the Court was “unpersuaded that the Plaintiffs are in a position to take any form of ‘supervisory role over lead counsel,’ including as to decisions regarding settlement.” Instead, the Court found Plaintiffs had done “no more than ‘simply lend their names to a suit controlled entirely by the class attorney[s],’” and were not adequate class representatives. While courts tend to certify non-opt out classes in ERISA excessive fee cases (and some defendants have recently chosen to stipulate to certification), this decision—and others like it—demonstrate that it remains plaintiffs’ burden to demonstrate that they can meet the certification requirements set out in Rule 23. To that end, thorough investigation throughout discovery can play a vital role in defense of these actions, and can serve to develop facts related to plaintiffs’ individualized circumstances that can be used to defeat showings of adequacy or commonality, or to identify intra-class conflicts sufficient to defeat class certification.

By: Ronald Kramer and Seong Kim

Seyfarth Synopsis:  Another court has found that actuaries who set discount rates for withdrawal liability purposes that are not based upon their “best estimate of anticipated experience” for investments under the plan—in this case, basing the rate assumption only on estimated returns for 40% of the Plan’s assets in low risk fixed income investments—cannot withstand judicial scrutiny.

Yet another multiemployer pension plan’s withdrawal liability interest rate assumption has been shot down by the courts, this time by the Federal District Court for the District of Columbia in Employees’ Retirement Plan of the National Education Association v. Clark County Education Association, Case No. 20-3443 (RDM), 2023 BL 62912 (D.D.C. Feb. 27, 2023), due to the actuary’s failure to adequately justify his decision to use a lower interest rate than that used for funding obligation purposes.  This case is worth noting, as it interprets the D.C. Circuit Court’s decision in United Mineworkers of America 1974 Pension Plan v. Energy West Mining Co., 39 F.4th 730 (D.C. Cir 2022), which struck down the use of PBGC plan termination rates for withdrawal liability purposes.

For background, the Clark County Education Association (“CCEA”) was a contributing employer to the Employees’ Retirement Plan of the National Education Association of the United States (the “Plan”), a multiemployer pension plan.  CCEA withdrew from the Plan in 2018, and the Plan subsequently assessed withdrawal liability of $3,246,349 against CCEA.

In calculating withdrawal liability, the Plan actuary did not use the PBGC plan termination rates, the Plan’s 7.3% funding rate-of-return, or any combination thereof, as the interest rate assumption.  Instead, the actuary utilized a discount rate assumption of 5%, and explained this  was his best estimate of the expected returns on low investment risk and fixed income investments of the types in which the Plan invested.  The actuary explained he adopted this methodology, because the rate reflected both a low-rate investment environment and the expected returns on lower-risk fixed income investments.  Moreover, such a lower rate recognized that a withdrawing employer no longer participates in any future risks regarding plan investments, and the actuary believed it did not make sense to value a liability based on higher rates of return that provided for additional investment risk that only the remaining participating employers had to bear. 

After an arbitrator found the actuary’s assumptions to be unreasonable in the aggregate because the discount rate was unreasonable, the Plan appealed.  The Court found it was “evident from the record that the 5.0% withdrawal liability discount rate . . . was not [the actuary’s] ‘best estimate of anticipated experience under the plan’ as Energy West interpreted that language.’”  Granted, contrary to Energy West, where the actuary used PBGC plan termination rates totally divorced from Plan assets, the discount rate applied here was based investment types actually in the NEA plan.  Yet only 40% of plan assets were in low-risk investments, and that did “not cut it.”  “Energy West requires that an actuary ‘estimate how much interest the plan’s assets will earn based on their anticipated rate of return.’ 39 F.4th at 738.  A discount rate assumption based on the expected returns on a type of asset that makes up less than half of a Plan’s portfolio falls short of that standard.”

The Court made clear that Energy West “does not deprive actuaries of all flexibility” in determining interest rate assumptions for withdrawal liability purposes, nor does it preclude any consideration of risk shifting.  Instead, the Court recognized that there can be a range of permissible discount rate assumptions.  The Court also noted that Energy West does not hold that an actuary’s estimate must encompass the expected rate of return of all of the Plan’s assets.  It could preclude, however, estimates that disregard the expected returns of the majority of the Plan’s assets.  The Court noted that the fact that the actuary reviewed a portion of the Plan’s assets cannot make up for the fact that he failed to consider most of them.  An actuary may be able to weigh risk shifting in the course of selecting a discount rate assumption at the conservative end of a range of reasonable estimates of anticipated investment returns, but “an actuary cannot risk shift his way to a discount rate ‘divorced from’ a plan’s anticipated returns or, as in this case the majority of the assets that drive such returns.” (Citations omitted).

The Court also refused to credit the conclusion of the Plan’s expert witness that 5.0% could be a reasonable estimate of the expected returns of the Plan’s entire portfolio.  The Court was focused not on what an actuary might have done, but what the actuary actually did. Here, the Plan actuary did not look at the Plan’s entire portfolio to determine what a reasonable discount rate was.  The discount rate assumption was unreasonable because it did not give due regard to the Plan’s experience, and given the overall calculation contained no offsetting changes to blunt the impact of that assumption, was unreasonable in the aggregate as well.

Although the arbitrator ordered the NEA Plan to recalculate liability using the actuary’s 7.3% funding rate of return, the Court remanded the matter back to the arbitrator for reconsideration.  The Court noted that while in certain circumstances arbitrators have the authority to impose set remedies, in general arbitrators must defer to the reasonable assumptions made by plan actuaries, and must avoid substituting their own views for those of the actuaries. 

Here, the arbitrator did not explain why setting a discount rate as opposed to a more open-ended remedy was appropriate.  On remand, and in light of the Court’s decision, if the arbitrator concludes it should give the actuary another opportunity to set a reasonable rate, it should do so.  If the arbitrator finds that the actuary really believed that a discount rate of 7.3% reflected the Plan’s anticipated experience, then the arbitrator should say so and could order that rate be used.

Yet again, the use of a discount rate assumption that is divorced from the actual expected investment returns of the majority of plan assets has been found to be unreasonable in the aggregate, and not the actuary’s best estimate.  While the pending PBGC regulations setting forth accepted discount rate methodologies—assuming they are adopted and withstand judicial scrutiny—may resolve this dispute for withdrawals going forward, litigation remains ongoing for those withdrawals that predate the ultimate adoption of the regulations.

Signed into law in the waning days of 2022, the SECURE 2.0 Act contains over 90 provisions impacting qualified retirement plans. Several of these provisions materially expand how Roth contributions are to be used, that impact employers and participants alike. We are witnessing the Rothification of retirement accounts. Grab your cup of coffee and tune in to hear Richard and Sarah chat with Seyfarth colleague Ben Spater about the many Roth related changes in SECURE 2.0. We will continue to discuss the multitude of other (non-Roth) provisions in SECURE 2.0 in future episodes as well. So bookmark us!

Click here to listen to the full episode.

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By: Cassandra Frias and Ada Dolph

Seyfarth Synopsis: After focusing most of its attention on retirement benefit plans, a recent complaint filed in the District of Connecticut shows that the plaintiffs’ bar is turning to health and welfare plans as targets for their new theories of breach of fiduciary duty under ERISA.

Plaintiff Aubrey Srednicki is enrolled in a group health plan provided by her employer and administered by Cigna Health and Life Insurance Company. She filed suit against Cigna Health and Life Insurance Company in the District of Connecticut on February 24, 2023.  In her Complaint, Srednicki alleges that a Cigna-affiliated medical provider overcharged her for services, allowing Cigna to take credit for a larger discount than was given, and to balance bill her significantly more than her copay would have been on the actual price of the services.  Notably, Srednicki seeks to represent a class of individuals much broader than those in her own benefit plan.  She seeks to certify a class of all individuals who were or are enrolled in an employee benefit plan insured or administered by Cigna, who had lab work done at one of two Cigna-affiliated laboratories, and whose cost share was more than the amount paid actually paid by Cigna for the lab work. 

Srednicki offered her own lab work as an example: she alleged that her doctor called LabCorp to inquire about the cost for a patient without insurance and was told that the lab work cost $449. Srednicki alleges, however, that the billed amount on her explanation of benefits (EOB) was $17,362.66. Of this amount, $14,572.66 was the purported discount arranged by Cigna. Of the difference, Cigna allegedly paid $471.02 and billed Srednicki for the $2,315.98. Having already fully paid LabCorp, Srednicki alleges that the $2,315.98 was a windfall for Cigna.

Srednicki’s brings claims under both ERISA 502(a)(1)(B) and 502(a)(3).  She seeks clarification of her benefit rights, a finding from the court that the putative class members were overcharged, an accounting of the overcharges, and the return of the amounts the members were overcharged.  Srednicki alleges that Cigna’s overcharging constituted a prohibited transaction and benefited a party in interest.  She also alleges that Cigna failed to monitor appointed fiduciaries, failed to apply plan terms to the calculation of benefits, failed to follow plan procedure, and violated the duty of prudence. 

In short, with increased focus on the fees and billing arrangements in the health and welfare benefit plan sphere, whether plan administrator or claims administrator, now is the time to examine your plan and shore up its compliance with ERISA. Please reach out either to the authors of this Blog Post or to your Seyfarth Employee Benefits attorney if you need additional information.

Seyfarth Synopsis: New IRS FAQs provide helpful clarifications on eligible medical expenses for HSAs, FSAs, MSAs, and HRAs (including the conditions for reimbursement of those gym memberships).

On March 17, the Internal Revenue Service (IRS) posted a new set of Frequently Asked Questions (FAQs) aimed at individual taxpayers, addressing whether certain medical expenses related to nutrition, wellness, and general health may be paid or reimbursed from health savings accounts (HSAs), health flexible spending arrangements (FSAs), Archer medical savings accounts (MSAs), and health reimbursement arrangements (HRAs) (collectively, “Accounts”).

Notably, the list of eligible expenses differs slightly from the medical expenses that are deductible by a taxpayer under Section 213(d) of the Internal Revenue Code (Code). Although Internal Revenue Service (IRS) Publication 502, Medical and Dental Expenses addresses the deductibility of various medical and dental expenses, it may not be relied upon for answers to all questions regarding eligible Account expenses. Therefore, these FAQs specifically addressing Account-eligible expenses are particularly helpful to individual taxpayers who are Account holders, and to the benefits practitioners who respond to their questions. (Additional information about these Accounts also may be found in IRS Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans.)

The FAQs reiterate the definition of medical expenses found in Publication 502 and in Code § 213(d):

“Medical expenses are the costs of diagnosis, cure, mitigation, treatment, or prevention of disease, and for the purpose of affecting any part or function of the body. These expenses include payments for legal medical services rendered by physicians, surgeons, dentists, and other medical practitioners. They include the costs of equipment, supplies, and diagnostic devices needed for these purposes.”

In addition, “[medical] expenses must be primarily to alleviate or prevent a physical or mental disability or illness” rather than being “merely beneficial to general health.”

The FAQs then provide the following specific guidance on whether various expenses are eligible for payment or reimbursement from Accounts.

FAQ Number(s)Expense(s)Eligible Expense(s) for Account Purposes?
1, 2, 3dental, eye, and physical examsYes, because these exams “[provide] a diagnosis of whether a disease or illness is present.”
4, 5, 6programs to treat drug-related substance or alcohol use disorders and smoking cessation programsYes, because these programs each treat a disease (a substance, alcohol, or tobacco use disorder).
7therapyMaybe—if the therapy is treatment for a disease; “therapy to treat a diagnosed mental illness is [eligible], but an amount paid for marital counseling is not.”
8, 9nutritional counseling and weight-loss programsMaybe—only if the counseling or program is used “[to treat] a specific disease diagnosed by a physician [(e.g., obesity, diabetes, hypertension, or heart disease)].”
10gym membershipMaybe—“only if the membership was purchased for the sole purpose of affecting a structure or function of the body (such as a prescribed plan for physical therapy to treat an injury) or the sole purpose of treating a specified disease diagnosed by a physician (such as obesity, hypertension, or heart disease).”
11swimming or dancing lessons or other exercise for general health improvementNo, because these are “only for the improvement of general health,” and so are not eligible expenses “even if recommended by a doctor.”
12food or beverages purchased for health reasons (including weight loss)Maybe—only if all three of the following are true with respect to the food or beverage: (i) it “doesn’t satisfy normal nutritional needs,” (ii) it “alleviates or treats an illness,” and (iii) its need “is substantiated by a physician.”
If these three requirements are met, only “the amount by which the cost of the food or beverage exceeds the cost of a product that satisfies normal nutritional needs” is eligible.
13over-the-counter drugs and medicine (even if not prescribed) and menstrual care productsYes, these are eligible expenses for Account purposes (for expenses incurred after 2019, under changes made by the CARES Act).
14nutritional supplementsMaybe—“only if the supplements are recommended by a medical practitioner as treatment for a specific medical condition diagnosed by a physician.”

What should you do with this new guidance? Because each of these FAQs is dated, we suspect (and hope) that this is a page that the IRS intends to maintain, and so we suggest a bookmark to this page for your reference and to watch for future developments. We also suggest including a link to these FAQs in your summary plan descriptions (SPDs) and other plan communications in which any of these Accounts are discussed. You might also confirm with your Account service providers that the information provided in these FAQs is consistent with their administration.