When we started out 2020, any legislative predictions we had for the year would have been wrong. It was an election year after all, which typically creates strong stalemate positions and not much else. But as we all know, 2020 has been anything but typical.
In fact, we have seen over 7 significant legislative changes in the first 7 months of the year. In case you missed any of these legislative changes, here is your quick run down.
7 legislative changes relevant to your benefits
1. Prescriptions are no longer required for over-the-counter (OTC) drugs and medicines
The CARES Act permanently made OTC drugs and medicines eligible expenses that can be paid from FSAs, HRAs, HSAs without a prescription. Any OTC expenses purchased on or after January 1, 2020 are eligible without a prescription.
What does this mean? You no longer have to visit or call the doctor for a prescription to get your OTC meds covered. Other common items now include: pain relievers, cold & flu remedies, decongestants, first aid & rash creams. View our sample list to see more OTC items.
2. Menstrual care products are eligible for reimbursement
The CARES Act also expanded the definition of eligible items to include menstrual care products. This means feminine care products, including tampons, pads, menstrual cups / diva cup, panty liners, period panties and feminine wipes, can be purchased through a tax-free health account. As with the OTC items, this rule applies to any menstrual care products purchased on or after January 1, 2020.
3. Insurance covers COVID-19 testing
The Families First Coronavirus Act requires all private insurance plans to cover COVID-19 testing without deductibles, co-insurance, or co-pays. In most cases, the provider of the COVID-19 diagnostic testing is reimbursed at a negotiated rate or published cash price that is paid by the plan or issuer.
4. Tele-health services can be covered prior to the deductible and remain HSA-eligible
The CARES Act allows tele-health services to be covered prior to a deductible for plan years beginning on or before December 31, 2021. Previously, this tele-health services were only eligible to be paid from an HSA after the insurance deductible had been met.
With an HSA, services generally cannot be paid by insurance until the deductible is met, unless the service is preventative care.
5. Plan deadlines automatically extended based on the “Pandemic Period”
Guidance from the IRS and Department of Labor automatically extends certain deadlines for:
- Enrolling in coverage
- Paying for COBRA continuation coverage
- Submitting claims under a plan
This guidance, released on on April 29, identifies the “Pandemic Period” as a twilight zone of time that doesn’t count towards normal deadlines. When the “Pandemic Period” ends, the clocks start back up. (Since we are still in a declared pandemic, this date continues to be a moving target.)
6. Relief options for FSAs due to COVID-19
In response to COVID-19, employers were allowed to amend their plans for certain mid-year changes, including:
- Extend claims periods until 12/31/20
- Permit mid-year election changes for Medical FSAs and Health FSAs (without a qualifying event)
Please note, this is considered OPTIONAL relief and employers must choose to change their plan in order to take advantage of it.
7. Medical FSA carryover increases to $550
Since the introduction of the Medical FSA rollover in 2013, the rollover feature has been set at $500 with no fluctuations. One of the many notices from the IRS (Notice 2020-33) not only increases the current rollover from $500 to $550 for Medical FSAs, but establishes it will now be adjusted annually for inflation.
While there were many questions and concerns answered during the turmoil that has marked 2020, there are a few key issues that remain. We continue to monitor the situation and are seeking potential relief, specifically for commuter benefits.
A closer look at commuter benefits
While unused funds in a mass transit and / or parking benefit account will automatically rollover from month to month and are not lost, there is a need for increased flexibility. What was hoped to be a short-term disruption is now in its 5th month.
In BRI’s July 15th webinar, Realigning Your Benefits, 89% of attendees expected at least some remote work to continue through the end of 2020. This creates a situation in which employees need options and legislative changes are desired. Possible approaches to relief would be:
- Permit employees to move funds between a mass transit and parking accounts.
- Expand eligible commuting expenses to include car sharing, bike sharing or other alternative transportation.
- Allowing a one-time taxable refund for employees that will be unable to take advantage of the benefit.
While it is hard to speculate if relief will be provided, you can contact the IRS to request relief and guidance for this difficult time. Be sure to share a little IRS love.