How the CARES Act Affects Health FSA and HSA Benefits
May 26, 2020
On March 27, 2020, the U.S. federal government passed a bill entitled the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). The act affects Flexible Spending Arrangements (FSA) and Health Savings Accounts (HSA). It was designed to provide economic and healthcare-related relief to individuals and employers. Here’s how your health FSA and HSA benefits will be impacted:
Under the CARES Act, over-the-counter (OTC) medications are now reimbursable under an FSA or HSA without a prescription or a doctor’s note. The FDA defines OTC medications as medicine that you can buy without a prescription. They are safe and effective when you follow the directions on the label and as directed by your health care professional. Although a prescription is not required for reimbursement, proper documentation may be requested. They may ask for information like the date the item was purchased, the cost of the item, and a description of the item. You can usually find all this information on your store receipt.
Under the CARES Act, menstrual care or feminine products are now seen as medical care. That makes them reimbursable for account-based health plans like an FSA or an HSA. Under the law, here are some examples of qualifying feminine products:
When is it effective?
The CARES Act was officially signed into law and became effective on March 27. While certain provisions are temporary, the provisions for feminine products and OTC medications are both permanent and effective retroactively to January 1, 2020.
FSA vs. HSA
What is the difference between an FSA and an HSA?
A Flexible Spending Arrangement is a savings account owned by your employer to help pay for qualified medical expenses and it is funded by associate salary deferrals.
A Health Savings Account is available with a high deductible health plan (HDHP) where the money can be used to pay for qualified medical, prescription drug, dental or vision expenses such as expenses toward your deductible and out-of-pocket maximum.
HSAs are funded by both associate and employer contributions.
FSA funds are not taxed, but, unlike an HSA, any additional funds (in excess of any allowable carryover funds) remaining at the end of the benefit year are returned to your employer. An FSA does not have to be paired with a health plan and can be offered as a stand-alone option.
If you have an FSA or an HSA account, then you should be aware of these changes enacted by the CARES Act. To learn more about your FSA or HSA, please visit ConnectYourCare. For questions concerning your current health plan, give us a call at 888-492-6811.