Consociate Health > News > The CARES Act and Health Plan Coverage

The CARES Act and Health Plan Coverage

April 3, 2020

On March 27, 2020 President Trump signed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) into law to provide $2.2 trillion in federal funding to address the coronavirus crisis.  The new law also includes several provisions affecting health plan coverage. The attached Compliance Bulletin summarizes the CARES Act’s changes for health plans.

The attached Know Your Benefits article explains how the CARES Act repeals the Medicine Cabinet Tax provision of the Affordable Care Act, expanding the list of qualifying expenses that can be purchased with Flexible Spending Accounts (FSAs), Health Reimbursement Arrangements (HRAs) and Health Savings Accounts (HSAs).

FSA/HRA/HSA Plan Changes to allow Tax-Free Coverage for OTC Drugs and Menstrual Products

Effective Jan. 1, 2020, the CARES Act provides that OTC medicines are qualifying medical expenses that may be paid for (or reimbursed) on a tax-free basis by a health FSA, HRA or HSA. This change eliminates an ACA provision that required individuals to have a prescription for an OTC medication (except insulin) to pay for it on a tax-free basis with their health FSA, HRA or HSA.

In addition, effective Jan. 1, 2020, menstrual care products are qualifying medical expenses that can be paid for (or reimbursed) on a tax-free basis by a health FSA, HRA or HSA. Menstrual care products include tampons, pads, liners, cups, sponges or similar products used by individuals with respect to menstruation.

These changes are discretionary for employers that sponsor health FSAs and HRAs. However, because HSAs are individual accounts, and not employer plans, employers do not control how HSA funds are used.

What if Consociate Health Administers my FSA/HRA/HSA Benefits?

Consociate Health is ready to process any manual claims submitted (when a Debit Card is not used) for reimbursement on these products. We are also setup behind the scenes with our Debit Card Vendor to make sure your consumers can begin to utilize their benefits debit card for the purchase of these products as soon as possible.

Please Note:  Your members can not yet purchase OTC or menstrual care items using their benefits debit card. Consociate Health is ready, but several steps must be taken by merchants before the members will be able to use their benefits debit card at the Mass merchandiser and Pharmacy locations.

The below steps will need to occur before the benefits debit card will be able to be used for the newly eligible items.

  • IIAS Standards (SIGIS) board must first adopt these new standards and publish the revised Eligible Product List.
  • Merchants (i.e. Walmart, Walgreens, CVS and smaller drug and grocery stores) must update their systems with the new Eligible Product List.

We expect merchants to start adopting changes for the OTC items around April 15th. However, merchants may take anywhere from 4-6 weeks to complete the changes that will allow consumers to purchase these items with a card swipe. All of this will undoubtedly result in inconsistencies in shopping experiences for the consumer (i.e. OTCs may be allowable 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.

If consumers try to purchase these items with their benefits card before the systems have been updated and the transaction is denied, they can submit a claim for reimbursement.

If you have any questions, please contact us at customerservice@consociate.com.

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