The CARES Act makes OTCs Eligible
The Cares Act was signed into law on Friday, March 27th, 2020 as an additional piece of legislation crafted to help Americans during the COVID-19 (coronavirus) pandemic. It includes a number of provisions that affect your employee benefits plan(s). We’ve outlined a few of the highlights below.
OTC products as eligible expenses
The CARES Act permanently reinstated over-the-counter products as eligible expenses for Health Savings Account (HSA), Flexible Spending Account (FSA) and Health Reimbursement Arrangement (HRA) funds without a prescription. This reverses laws put in place by the Affordable Care Act nearly 10 years ago, which stated that those expenses were only eligible for reimbursement with a prescription. This change takes place retroactive to January 1st, 2020, and a formal list of eligible OTC items is expected to be made available by April 20th, 2020.
Menstrual care included as eligible
Menstrual care products were added as eligible expenses as part of the legislation. That means employees can now use their HSA, FSA and HRA funds to purchase items such as tampons, pads and menstrual sponges. This change also takes place retroactive to January 1st, 2020.
HDHPs and telehealth services
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 reached his/her deductible. This change continues through 2020 and 2021 (for calendar year plans). This comes after the recently passed Families First Coronavirus Response Act required certain coronavirus-related telehealth expenses to be covered with no cost sharing.
How OTC changes affect your Plan
Since FSAs already cover a limited number of OTC products today, manual claims for OTCs and menstrual items purchased on or after January 1st, 2020 will be considered for reimbursement. The Inventory Information Approval System (IIAS) is currently being reviewed and we expect them to expand the capabilities of the Pro-Flex Benefit Card to accept transactions for the expanded OTC list and menstrual items over the course of the next 4-6 weeks.
HSA members may request a distribution to reimburse themselves for eligible OTCs and menstrual items purchased on or after January 1st, 2020. The Pro-Flex Benefit Card can be used to purchase items on the expanded OTC list once the IIAS update is complete.
If your HRA is unrestricted and already covers IRS Section 213(d) expenses, manual claims for OTCs and menstrual items purchased on or after January 1st, 2020 will be considered for reimbursement. The Pro-Flex Benefit Card can be used to purchase items on the expanded OTC list once the IIAS update is complete. Restricted HRAs that cover a limited set of expenses, such as deductible only HRAs, will not be impacted.
We will continue to update you as we have additional information to share, including a formal list of eligible OTC items once available.
If you have specific questions regarding your plan, eligible items, or the impact of the CARES Act on your benefits, please contact Pro-Flex Administrators for further information.
The above information is for educational purposes only. It is not legal or tax advice. For legal or tax advice, you should consult your own counsel.
