Recent guidance from the IRS confirms two widely understood features of a health flexible spending account plan.
- Health FSAs Cannot Reimburse Insurance Premiums. IRS Information Letter 2016-0001 confirms that health FSAs cannot be used to reimburse or pay health insurance premiums. A copy of the Information Letter can be accessed here.
- No Exclusion from Income for Reimbursement of Spouse’s Pre-Tax Premiums. IRS Information Letter 2016-0009 confirms that amounts paid to an employee to reimburse a spouse’s health premiums may not be excluded from the employee’s income if the spouse paid the premiums on a pre-tax basis, such as through salary reduction under a cafeteria plan. A copy of the Information Letter can be accessed here.