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.