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The CARES Act and Your HSA/FSA

Among the many provisions in the Coronavirus Aid, Relief and Economic Security (CARES) Act are several changes affecting the use of Health Savings Accounts (HSAs) and Dependent Care Flexible Spending Accounts (FSAs). In keeping with the intent of the Act, all are designed to provide relief to those who are financially affected by the pandemic. Let’s take a look:

With virtually all schools and most offices closed, many have seen a substantial change in their need for child care. The CARES Act allows participants to increase or decrease dependent care FSA contributions to accommodate a change in child care provider, a change due to a new job or altered work hours, or the cost of care changes (unless the care provider is a relative).

Changes to FSA election amounts may be made only in the case of a qualifying life event. In the COVID-19 environment these include a change in employment status affecting eligibility, FMLA leave or a change to the number of dependents.

Perhaps the most wide-reaching provision involves both HSA and FSA accounts as they relate to over-the-counter (OTC) drugs. Under the terms of the Affordable Care Act (ACA), OTC purchases were qualified for HSA/FSA reimbursement only for certain accounts, and only if those drugs were purchased with a prescription.

The CARES Act largely does away with these qualifiers, making a wide variety of OTC products eligible for reimbursement. These range from aspirin and antihistamines to first aid kits to feminine hygiene products. Even sunscreen and reading glasses now qualify.

Telehealth services are also now HSA/FSA qualified, through the end of 2021.

Note that all of the above changes were made retroactive to January 1st, 2020, so any OTC purchases made this year should be eligible for HSA/FSA reimbursement.

Questions about the CARES Act or other benefits issues? Contact Consolidated Insurance.