CARES Act Impact on High Deductible Health Plans, HSAs, FSAs and HRAs
The Coronavirus Aid, Relief and Economic Security Act (CARES) Act, passed on March 27, 2020, and includes several provisions that affect your health plans. In addition to broadening COVID-19 focused benefits already addressed in the Families First Coronavirus Response Act, the CARES Act addresses significant changes to High Deductible Health Plans (HDHPs), Health Savings Accounts (HSAs), Flexible Spending Accounts (FSAs), and Health Reimbursement Accounts (HRAs).
Specific provisions relating to these tax-favored plans include:
- HSA Contributions: HSA owners can continue making 2019 contributions through the extended tax filing deadline of July 15, 2020. More detailed information can be found here on the IRS’s “Coronavirus Tax Relief” page.
- Telehealth: HDHPs may waive participant cost-sharing requirements (deductible or coinsurance) for all “telehealth and other remote care services” (including services unrelated to COVID-19) without affecting the HDHPs compatibility with HSAs. This provision applies to plan years beginning on or before December 31, 2021. Employers need to understand how insurance carriers are addressing this change and for plan sponsors of self-insured plans to define the specific telehealth and remote care services benefit that will be offered. Click here to read IRS Notice 2020-15 “High Deductible Health Plans and Expenses Related to COVID-19”.
- Over-the-Counter (OTC) Drugs: HSAs, FSAs, and HRAs may now reimburse over-the-counter medications without a prescription for expenses incurred after December 31, 2019. This CARES Act provision eliminates the ACA rule that prohibited reimbursement of OTC drugs (other than insulin) unless prescribed by a physician.
- Menstrual Care Products: These products are now an eligible expense through HSAs, FSAs, and HRAs. Menstrual care products included are tampons, pads, liners, cups, sponges, or similar products used by individuals concerning menstruation.
While the CARES Act lays the foundation for these changes, it is crucial for insurance carriers and plan sponsors to assure that plan documents (SPDs, SBCs, etc.) reflect the changes as soon as possible.
Aldrich is Here to Support You
The CARES Act contains numerous other provisions designed to help businesses impacted by the COVID-19 crisis. As always, Aldrich is here to provide support for you during these rapidly changing times. We understand these changes are complex and are here to help you understand the potential impacts on you and your business. For further information, please contact your Aldrich Advisor. We are monitoring the effects of COVID-19 closely and will continue to provide updates. For more resources, please visit our COVID-19 Resource Center.
