The CARES Act, a $2.2 trillion dollar relief package, passed on March 27, and means that now you can save even more money with your flexible spending account (FSA), health spending account (HSA), or health reimbursement arrangement (HRA).
These accounts allow you to set aside specified amounts of pretax money and use it to cover certain health-related expenses. The trouble is, up until now, those expenses have been strictly defined and have come with lots of exceptions. You couldn't, for example, use your FSA card to buy a pain reliever or a box of tampons at the drugstore. Thanks to the CARES Act, though, some of those rules will change.
The changes to tax-related savings programs can help your dollars go further. "What we're talking about is cash flow, helping people right now," says Lazetta Rainey-Braxton, co-founder and co-CEO of 2050 Wealth Partners. "Health care is very important. We are hoping the CARES Act removes a barrier to self-care."
Here are three ways that the CARES Act affects your health-related spending and can help you save money.
Previously, you needed a prescription if you wanted to buy over-the-counter medications using an HRA, FSA, or HSA. The new law allows you to purchase basic medications without that extra step. "Some of the best OTC drugs, you can get those for a lot less money if you do it OTC than by prescription," says Steve Neeleman, founder and vice chair of health savings trustee HealthEquity.
Braxton says that people are watching to see what they should buy to get them through the pandemic. "Some people don't like taking meds or don't want to spend the money on it," she says. "Tylenol, allergy medicine, that's now available and less burdensome on individuals. Now, maybe they will feel more inclined if they need it."
The changes regarding OTC medication and menstrual care products are retroactive to January 1, 2020, so you can still submit your receipts and get reimbursed for this calendar year.
All menstrual care products are now covered by HSAs, HRAs, and FSAs. This includes tampons, pads, or any similar items. Previously, the only products that were eligible to be covered were ones that were used to diagnose, prevent, or help treat a disease. Menstrual care items instead fell under the category of "personal care."
"The menstrual care products to me is a no-brainer," says Braxton. "It just took the pandemic for that to be included. Whoever put that on, thank you very much."
Neeleman says this move, too, makes necessary products easier and cheaper to access. "It's a medical need, a health-care need, and I think it just puts it on an even footing," says Neeleman. "It's just that women are adversely affected in that regard, because they have to pay for those products, so I think it's a great thing that we can get that done."
The CARES Act allows the costs of telemedicine to be covered by an HSA before you've reached your deductible. Previously, that wasn't always the case.
"As a physician, I've always believed that the more efficiently we can get care to patients, especially in a new world where people are quite good with technology, that this would become more of a need," says Neeleman. "It required the coronavirus for this to drive the point home and think out of the box."
The change to telehealth appointments under HSAs is temporary: It will be in effect through December 30, 2022, after which previous restrictions will apply.
Braxton says telehealth is going to be extremely important during this time, and she suggests checking with your employer to find out whether your plan includes telemedicine for mental health services. "What we're getting at is trying to minimize what's coming out of pocket," she says. "This is a window to figure out what you already have and how these new opportunities with the CARES Act will enhance what you've already signed up for."
Neeleman notes the value of the relief package for now and in the future. "This is a scary time for people, and this will help them stretch their dollars during this time," he says. "If they can understand the benefits of these accounts, that will be a great benefit for people."
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