New Rules for Health Care Spending

New rules under the CARES Act provide
flexibility for health care spending.

These new rules may be helpful in the current COVID-19 environment where more people may need at-home services due to measures to fight the coronavirus.

Telehealth and High Deductible Health Plans

Under the CARES Act, a high deductible health plan (HDHP) temporarily can cover telehealth and other remote care services without a deductible, or with a deductible below the minimum annual deductible otherwise required by law.

Telehealth and other remote care services also are temporarily included as categories of coverage that are disregarded to determine whether an individual who has other health plan coverage in addition to an HDHP is an eligible individual who may make tax-favored contributions to his or her HSA. Thus, an otherwise eligible individual with coverage under an HDHP may still contribute to an HSA despite receiving coverage for telehealth and other remote care services before satisfying the HDHP deductible, or despite receiving coverage for these services outside the HDHP.

The temporary rules under the CARES Act apply to services provided on or after Jan. 1, 2020, for plan years beginning on or before Dec. 31, 2021.

Expansion of Qualified Medical Expenses

The CARES Act also modifies the rules that apply to various tax-advantaged accounts (HSAs, Archer MSAs, Health FSAs, and HRAs) so that additional items are “qualified medical expenses” that may be reimbursed from those accounts. Specifically, the cost of menstrual care products is now reimbursable. These products are defined as tampons, pads, liners, cups, sponges, or other similar products. In addition, over-the-counter products and medications are now reimbursable without a prescription. The new rules apply to amounts paid after Dec. 31, 2019.

To submit claims for reimbursements, save receipts of these and other health-related purchases.

Final Thoughts

If you have tax-related questions concerning these temporary changes to your health plan, contact your local tax professional.

Stay safe. Stay well. Stay home.