On Friday, March 27, 2020, Congress passed the CARES Act (H.R. 748) and the President signed it into law. The $2 trillion bill is designed to provide economic relief for American citizens and business due to the COVID-19 healthcare emergency that has greatly impacted the U.S. economy. In addition to the stimulus checks and unemployment benefits the bill provides, the legislation also expands how workers can use their healthcare benefits accounts.
CARES Act Expands HDHP Coverage and Eligible Medical Expenses for FSAs, HSAs
Telemedicine Coverage Under an HDHP
Effective immediately, the CARES Act approves payments for “telehealth and other remote care services” under a high deductible health plan (HDHP). Typically, an HDHP is only allowed to pay benefits after the deductible has been met, with the exception of preventive services, allowing HSA owners to still qualify to make contributions to their HSAs. In response to the COVID-19 pandemic, the IRS has issued guidance that a HDHP can cover COVID-19 testing without cost-sharing without losing HSA eligibility.
The expiration date is December 31, 2021.
OTC Medications and Menstrual Care Products
The CARES Act also expands the list of qualified healthcare expenses for purchase with a Flexible Spending Account (FSA), Health Savings Account (HSA), and Health Reimbursement Arrangement (HRA). Over-the-counter (OTC) medications, including non-prescription pain relievers and cold/flu medications, may now be purchased with an FSA, HSA, or HRA without a prescription. Once classified as eligible healthcare expenses, most OTCs were disallowed beginning in 2011 under the Affordable Care Act (ACA).
In addition, menstrual care products have also been added to the list of qualified healthcare expenses.
There is no expiration date on this provision.
It is important to note that HRA plans may vary by employer and may not include these items as eligible expenses under the employer’s discretion. For FSAs and HSAs, account participants may purchase any qualified healthcare expense.
This new legislation comes on the heels of several recent measures that extended the tax filing and HSA contribution deadline to July 15, and allowed for coronavirus treatments to be covered by an HDHP.
CARES Act summary assistance provided by the Society of Professional Benefits Administrators (SPBA) and the Employers Council for Flexible Compensation (ECFC).