Tax-free tools like ICHRAs, QSEHRAs, FSAs and HSAs just got easier to use for over-the-counter (OTC) medication, thanks to The CARES ACT, the latest legislation to help combat the effects of Coronavirus (COVID-19).
The CARES Act brought a lot of ideas together on how to help small businesses and individuals alike (read our blog on how the CARES Act helps small businesses here). One of the things that might get overlooked is the expansion of eligible items available tax-free under these accounts.
How the CARES Act gives more flexibility to HRAs, FSAs, and HSAs
Two permanent changes arrived when the bipartisan CARES Act was passed and are effective immediately.
- Previously, because of the Affordable Care Act, over-the-counter items like Tylenol and Robitussin required a prescription from a doctor in order to be eligible for reimbursement from an HSA, FSA or HRA. Under the CARES Act over the counter medications are eligible without a letter from a doctor or prescription. That means your cold meds, cough syrup, allergy medicine and more can be reimbursed tax-free. This will make it much easier for individuals to utilize their accounts.
- Menstrual products like tampons, pads, liners, and cups are now classified as eligible expenses (as opposed to "hygiene") to use with a tax-advantaged account. High five to all the ladies who will be saving money in the future on this monthly expense!
Pro tip: Vitamins and supplements still require doctor's note since they're not classified as an eligible drug.
Why this change is so great
We were excited to see tax-advantaged accounts get some love from the recent CARES Act. It means that there are more opportunities to use pre-tax dollars for more medical expenses and it just got a lot easier. Plus, this action helps reduce paperwork for doctors having to write prescription and doctors notes. They have enough on their plate already.
I wrote this blog because I care about ideas (big and little) that can help fix our healthcare system. I used to work on projects for Kaiser Permanente and the Parkland Health & Hospital System so I've seen the system inside and out. It's so important that consumers keep up with industry shifts and changing health insurance regulations. I'm also Take Command Health's Content Editor and a busy mom. Learn more about me and connect with me on our about us page. Thanks!