BASE^® Blog

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 businesses due to the COVID-19 health care emergency that has greatly impacted the U.S. economy.  In addition to the stimulus check and unemployment benefits the bill provides, the legislation also expands how workers can use their health care benefit accounts.

The CARES Act permanently reinstates coverage of OTC (Over-the-Counter) drugs and medicines as eligible for reimbursements from FSAs, HRAs, and HSAs without needing a prescription.  It further expands the definition of qualified OTC items to include menstrual care products, while also expanding telehealth services through HSAs.

OTC with pre-tax funds

When the ACA was signed on January 1, 2011, OTC drugs and medicines required a prescription in order to be an eligible medical expense.  Under the CARES Act, over-the-counter medicines not prescribed by a physician can be reimbursed pre-tax through an FSA, HRA, or HSA.

Menstrual products as eligible expenses

Under the CARES Act, menstrual care products were added as an eligible medical expense.  These products are defined as tampons, pads, liners, cup, sponge, or similar products used with respect to menstruation and can now be reimbursed through an FSA, HRA, or HSA.

HSAs used for telehealth

Telehealth services are already considered an eligible expense with the Health Savings Account (HSA).  However, these expenses could not be covered until the individual met their minimum deductible.  Under the CARES Act, plans may pay for telehealth services before reaching the deductible without impacting the individual’s eligibility for the HSA.  This provision is temporary outlining an end date of December 21, 2021 to help encourage telehealth services during the current public health crisis.

While these changes are effective immediately for expenses incurred on or after January 1, 2020, it is important to note that various businesses in the industry will adhere to their own timeline for updating systems to allow for these new eligible expenses.  BASE® has already moved forward with reimbursing these expenses and is excited about this change and the opportunity to provide affordable access to an expanded list of OTC items via tax advantaged plans.

The CARES Act was signed into law to provide emergency assistance and health care response for everyone affected by the current public health crisis.  For more information on what else the stimulus bill entails and the relief it will provide, click here.

BASE® knows this is a challenging time for all business owners, and we find it promising to see the extended flexibility offered through tax-advantaged benefit plans moving forward. 

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BASE® recognizes the public health crisis that the Coronavirus has created in our own backyard and across the globe, which is creating uncertainty in and among businesses.  Many employers and employees are worried about the repercussions of this virus and what it will do for their business and their employee benefits.

According to the National Federation of Independent Business, 76% of small businesses say they are now experiencing the negative impact from the coronavirus pandemic.  The Coronavirus is leading employers into having to make tough choices about how they are running their business for the foreseeable future.  Some of these changes, such as a reduction in hours, layoffs, etc., have consequences to their current benefit plan.

Some of these business changes can include:

• Employees becoming ineligible to receive benefits or
• Employers being required to make drastic changes in the plan setup

For example, prior to the Coronavirus outbreak and the implementation of “social distancing,” an employer serving as a manufacturer had employees working 30 hours per week and had a BASE® QSE HRA in place.  Now that there have been even more restrictions and guidelines put into place limiting businesses to operate at full capacity, this same employer in one of the 50 states hit hardest by the virus, is forced to cut employee hours to 20 per week.  This reduction in hours causes seven participating employees to lose eligibility in their QSE HRA.  This means employees will no longer be able to be reimbursed for out-of-pocket health care costs, including current health insurance premiums.

BASE® has been working with the employer as far as the change in the employee’s status, which has led to no claim reimbursement during the time the hours are to be altered.  The employer believes in setting an example for the equitable treatment of everyone involved in the supply chain of their products, and is keeping the plan in place for the day they can resume supporting employees working 30 hours per week.  At that time, employees will be reactivated and eligible to participate in the QSE HRA again with a prorated benefit.

Here at BASE®, we want to stress how important it is for employers to let us know of any changes, such as business structure, hours employees work, etc., to learn of any implications this might have on the current plan design in place.  We are seeing new examples of how business owners are forced to get creative with their benefit plans to make ends meet, and we are assisting them as to what is going to be the most cost effective situation for their business without losing the tax savings available through our benefit plans.

The virus is constantly evolving, and so are the needs of business owners across the country when it comes to employee benefit plans.  Despite the circumstances, our staff is still hard at work and ready to serve our clients.  If you are a current client, or even a new client looking for options to help cover the cost of healthcare during this volatile time, please reach out to BASE® at 1-888-386-9680.

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