On March 27, the CARES Act was signed into law. This legislation provides disaster relief to employers and employees in an effort to minimize the economic impacts of the COVID-19 pandemic. The bill also introduces some important tax-advantaged provisions specifically related to FSA/HSA/HRA that we are excited to share:
- Permanently reinstates coverage for OTC (Over the Counter) drugs and medicines as eligible for reimbursement without a prescription
- Expands eligibility to include menstrual care products
These changes are effective for expenses incurred on or after January 1, 2020. We welcome this change and the opportunity for your plan members to have affordable access to OTC and menstrual care items through these tax-advantaged benefits.
- OTC Rx Repeal: Prescriptions (Rx) will no longer be required for over-the-counter (OTC) drugs, including items like Tylenol, Claritin, Tamiflu, etc. when purchased with an FSA, HSA or HRA, effective immediately and retroactive to January 1, 2020. As you know, FSA, HSA and HRA OTC drug purchases have required a prescription since 2011 per the Patient Protection and Affordable Care Act. This change caused confusion and unnecessary trips to the doctor, and the welcome relief will mean that Americans with FSAs, HSAs and HRAs can again buy the OTC medicines they need to stay healthy now and in the future.
- Menstrual Care Products: The new allowance of menstrual care products as eligible under an FSA, HSA or HSA, effective immediately and retroactive to January 1, 2020. The bill indicates that this addition means a “tampon, pad, liner, cup, sponge, or similar product used by individuals with respect to menstruation” will qualify.
While we as an administrator are ready today, the full rollout requires the Special Interest Group for IIAS Standard (SIGIS) and merchants to take action. In the upcoming weeks an updated list of eligible products will be released from SIGIS and the implementation will follow with participating merchants updating their point of sale systems, which is typically done on a monthly basis. We anticipate that many will do this as soon as the new list is available.
It is important to emphasize that each merchant will adhere
to their own timeline for completion of this process based on their own
internal considerations. This will undoubtedly result in inconsistencies
in the shopping experience of our consumers (i.e. OTCs will be allowable for
card purchase at one merchant, but not another) as the industry makes this
important transition. We expect any issues like this to be temporary and
resolved in a fairly short timeframe. Should your members pay out of pocket for
an OTC product, they may file a claim online at myFlexDollars.com or on the
MyFlexDollars mobile app for reimbursement. The claim filing process will
NOT require a prescription for reimbursement.
We will continue to provide updates as they become available on this industry wide effort. In the meantime, Baker Tilly Vantagen will be posting revised Summary Plan Descriptions for your members’ to access in the consumer portal and preparing consumer level education collateral to include these changes.
The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax information, if any, contained in this communication was not intended or written to be used by any person for the purpose of avoiding penalties, nor should such information be construed as an opinion upon which any person may rely. The intended recipients of this communication and any attachments are not subject to any limitation on the disclosure of the tax treatment or tax structure of any transaction or matter that is the subject of this communication and any attachments.