OTC Items No Longer Need Prescription Current law requires that over-the-counter medicines and drugs (other than insulin) require a written prescription. This requirement is now permanently eliminated. All pre-tax accounts are impacted by this change in OTC expense eligibility, including health FSAs, HSAs, and HRAs. Employees now may purchase OTC medicines and drugs under their pre-tax account- based plan without a prescription. Menstrual Products Now Pre-tax Eligible Menstrual products are now considered eligible expenses under pretax reimbursement plans. This eligibility expansion applies to health flexible spending accounts (FSAs), Health Reimbursement Accounts (HRAs), and Health Savings Accounts (HSAs). Eligible menstrual care products include tampons, pads, liners, cups, sponge, or similar products used by individuals with respect to menstruation. This change is retroactive for amounts paid for these products retroactive to January 1, 2020. The inclusion of menstrual products as eligible expenses is a long-lobbied effort on the part of FSA and HSA vendors. Safe Harbor for Telehealth on HDHP Plans The absence of a deductible for telehealth and remote care services will not negatively impact the status of a High Deductible Health Plan. This provision is not mandatory but allows HDHP plans (the insurer or the self-funded plan) to provide these services on a first-dollar basis if they elect to do so. This allows employees covered under an HDHP to continue contributing to their HSA without fear of contributions being disqualified. This provision is effective for plan years before December 31, 2021 (for 2020 and 2021 for calendar year plan years). Free COVID-19 Services The types of testing that plans must cover without cost-sharing was expanded under the CARES Act. Now, plans must also cover without cost-sharing other forms of tests that are found to be necessary by the HHS. This open protection is designed to assure that any future COVID-19 testing protocols or services will remain under the no cost-sharing umbrella. In addition, any future COVID-19 vaccine (should one be developed and available) will also fall under this provision.
Other Provisions Impacting Employers
Tax-Free Employer Repayment of Student Loans Employers may make a repayment of up to $5,250 of an employee’s student loan debt. The payment would be tax-free to the employee if made after the enactment of the CARES Act and before January 1, 2021 (that is, the repayment is excluded from the employee’s income). Employer payment can be made to the employee or directly to the lender. It must be for principal or interest on a qualifying education loan incurred by the employee. The $5,250 cap would apply to the total employer educational assistance provided to an employee under current law (e.g., tuition, fees, and books) and the new provision in the CARES Act, not in addition to other educational assistance payments. Emergency Grants The bill provides $10 billion for grants of up to $10,000 to provide emergency funds for small businesses to cover immediate operating costs.
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