The Affordable Care Act amended Code Sections 106 and 213(d) to limit qualified expenses for general-purpose healthcare FSAs and HRAs so that a prescription was required for any over-the-counter medicines or feminine hygiene products.
New Rule
The recently-enacted CARES Act allows employees to use their healthcare FSA dollars for over-the-counter medicines and feminine hygiene products without a prescription. Employer-provided HRAs may also reimburse for over-the-counter medicines and feminine hygiene products without a prescription. This change took place once the Act was passed and was applied retroactively to January 1, 2020. Therefore, employees can submit expenses for reimbursement if over-the-counter or feminine care products were purchased on or after January 1, 2020.
Plan Amendment Requirements
Depending on how the plan defines “qualified expenses,” this change may be automatic, or it may require a plan amendment. Most cafeteria plans include a provision that expressly requires a prescription for over-the-counter medicines, and a plan amendment will be required to eliminate that provision.
Considerations
An employer considering this expansion of permissible expenses should ensure that its third-party administrator has the capability to implement the change, and, if so, confirm the timing of any system changes so that the employer does not prematurely notify employees.
About ERISAfire
ERISAfire LLC is an employee benefits compliance services firm, specializing in health and welfare benefits. ERISAfire has reimagined benefits compliance to help agencies and employers manage compliance risks and make the process easier. By leveraging custom-built technology to automate transactional tasks and provide a hyper-customized compliance calendar, its ERISA geeks can focus on complex analysis and experienced ERISA attorneys can scrutinize even the most mundane compliance tasks. Learn more at www.erisafire.com.
