The Coronavirus Aid, Relief, and Economic Security (CARES) Act, contains important provisions that will affect Health Savings Accounts (HSAs), Health Reimbursement Accounts (HRAs), and Flexible Spending Accounts (FSAs). Also, under existing rules, certain changes in your situation may allow you to increase or decrease contributions, or enroll or disenroll from your FSA.
Health Savings Account (HSA)
If you are one of the millions of Americans who have been furloughed or laid off, HSA funds can be used to pay for health insurance premiums, including COBRA, which allows some workers to keep their previous health coverage after unemployment.
If you were trying to save your HSA funds for the future, you may need to use them now to cover medical expenses, instead of tapping into your emergency savings. You can also get cash in hand to reimburse yourself for previous expenses out-of-pocket expenses you already paid for.
HSA-qualified plans can now also be used to temporarily cover telehealth or other remote-care services below the deductible. Over-the-counter drugs and medicine can now be purchased using your HSA without a prescription, as can feminine hygiene products, according to HealthSavings.
That means that items such as thermometers, batteries for medical devices, contact lenses and solution, prescription glasses, cold and allergy medicine, and first aid items like bandages, gloves and cleansing wipes are all covered. Vaccines are also covered.
Flexible Spending Account (FSA) – The Forgotten Money
While you can rollover HSA funds from year to year, you need to use most of your FSA dollars within the calendar year, or you will lose them.
If you lose your job, you can still submit claims for expenses up to the termination date of the FSA, and you have until the claim’s submission deadline set by your employer to submit them.
If you are still employed but want to reduce your FSA contributions the IRS allows an election change. Other reasons that IRS considers while allowing you to change your contributions.
- Reductions in hours that causes loss in coverage
- Change in employment status
- FMLA leave
- A substantial change in employer benefits/cost
We are monitoring the situation and keeping an eye on regulation changes; however, at this time there is no new or altered IRS guidance related to changes in FSA regulations as a result of COVID‐19.