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HSA, FSA, and HRA Account Changes with CARES Act

On Friday March 27th the CARES (Coronavirus Aid, and Economic Security) Act was signed into law to help Americans during the Covid-19 pandemic. This law provides flexibility for FSA, HRA, and HSA participants more than ever before.

Prior to the CARES Act:

Section 9003 of the Affordable Care Act established a new uniform standard for medical expenses. Effective Jan. 1, 2011, distributions from health FSAs and HRAs will be allowed to reimburse the cost of over-the-counter medicines or drugs only if they are purchased with a prescription. This new rule did not apply to reimbursements for the cost of insulin, which will continue to be permitted, even if purchased without a prescription.

Now that the Cares Act is Law:

The CARES Act permanently reinstates over-the-counter products as eligible expenses for FSA, HRA, and HSA funds without a prescription. This reverses laws put in place by the ACA (Affordable Care Act) nearly 10 years ago, which stated that those expenses were only eligible with a prescription. This change is retroactive to January 1st 2020.

Menstrual care products were added as eligible expenses as part of the legislation. That means that employees can now use their FSA, HRA, and HSA funds to purchase items such as tampons, pads and menstruation sponges. This change also takes place retroactive to January 1st 2020.

The CARES Act temporarily allows High Deductible Health Plans (HDHPs) with an HSA to cover any telehealth or remote care expenses, even if the participant hasn’t reach his or her calendar year deductible. This change continues through 2020 and 2021. This comes after the recently passed Families First Coronavirus Response Act requiring certain coronavirus-related telehealth expenses to be covered with no cost sharing.

Please let me know if you have any questions.

Stay Safe,

Dave Villar