The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) that was signed into law on March 27, 2020 permanently eliminates the ACA-imposed restriction that requires employees to obtain a prescription in order to be reimbursed for non-prescription “Over-The-Counter” drugs and medicines from a Health FSA, HSA, and certain HRA plans. This common sense change is exciting news for employers and employees that have struggled with the ACA restriction since it was enacted. We have prepared this CARES Act FAQ (frequently asked questions) to help employers understand what this change means and explain what steps we have taken for current BASIC FSA, HRA, and HSA clients to enhance their service.
Q: Which Over-The-Counter (OTC) drugs and medicines are now reimbursable without a physician’s prescription?
A: Effective for purchases on or after January 1, 2020, thousands of items, including pain relievers, cold and flu medications, antacids, acne remedies, and allergy medicines are now reimbursable from an FSA, Section 213 HRA, or HSA without a prescription. We expect industry watchdogs to release a list of over 19,000 eligible OTC drugs and medicines by late-April. In the meantime, all BASIC offices have already started to reimburse non-debit card OTC drug and medicine claims. In addition to eliminating the prescription requirement on OTC drugs and medicine, the new CARES Act has added hundreds of menstrual products to the list of approved expenses, including tampons, pads, liners, cups, sponges and similar items. As was the case prior to the passage of the ACA, vitamins and supplements will continue to require a physician’s “prescription” indicating that they are being taken to treat a diagnosed medical condition (e.g., anemia) rather than for general health and wellness.
Q: How long will it take retail merchants to update their systems so debit cards can be used?
A: This effort has already started. However, industry sources project it could take until the end of May (or longer) for all retail merchants to completely update their point-of-sale systems. During this period, participants that have a BASIC debit card may start to use it when making purchases. However, participants should understand that some or all of these OTC and menstrual expenses may continue to be denied until all merchant updates are completed. If a debit card purchase is wrongfully denied, participants will need to pay for these expenses using another form of payment, ensure they obtain an itemized receipt from the merchant (that identifies each item purchased in a clear manner), and then submit a claim to BASIC requesting reimbursement by check or direct deposit.
Q: How can BASIC participants submit claims if the debit card doesn’t work?
A: Claims can be submitted using the participant portal, mobile app, or by using a traditional claim form with supporting itemized receipts by regular mail, fax or email (not available to all participants).
Q: Our plan does not offer the BASIC debit card. Please explain how the card works when used to purchase qualified OTC and menstrual expenses?
A: One of the best features of the BASIC debit card is the convenience when used to purchase qualified OTC items from brick-and-mortar and online retailers (such as the FSA & HSA Store sites available on BASIC portals). When participants shop, they simply present their BASIC debit card first. This will trigger the system to look for and identify any of the thousands of qualified OTC items the participant may be purchasing, including the hundreds of newly added menstrual products. If some items being purchased (e.g., food, drinks) cannot be purchased using their BASIC debit card, the participant will be asked to present a second form of payment for the rest of their total purchase. It’s simple and care free! Participants will never be required to submit supporting documentation after their purchase and don’t even have to separate their items at the counter. They simply run all their items through the scanner as they normally would, present their BASIC debit card first, and the system will take care of the rest! Remember, it will take some time for all merchants to update their systems, but once they do, it is really this easy. If you wish to add debit cards at your next anniversary, reach out to your BASIC representative and we’ll assist you from there.
Q: Do current BASIC clients need to take any action or will BASIC implement this change automatically?
A: No employer action is required at this time. All standard Health FSAs and HSAs administered by BASIC will automatically be changed to reimburse these products. HRAs that are specifically designed to pay for Section 213 expenses (meaning they are intended to pay for anything a standard FSA allows) will also be changed to reimburse these new expenses. Limited Purpose Health FSAs and HRAs that limit reimbursement to specific expenses will NOT be changed to reimburse these expenses. This new legislation will have an extremely positive impact on overall participant satisfaction. Once fully rolled out, we anticipate fewer claim denials, fewer employee complaints, and increased participation resulting in greater tax savings for both employers and employees.
Q: Will current BASIC clients need to execute (sign) an amendment to implement this OTC change?
A: Not at this time. Because this simply reinstates expenses that were previously allowed and are universally desired, BASIC will automatically amend all plans to accommodate this change. After all, if BASIC were to require an employer signature, it would needlessly add months to this transition and cause frustration for participants. Should a signed amendment be required in the future, BASIC will notify you at that time.
Q: What if an current BASIC client does not want to allow this change?
A: If you are a current BASIC client and concerned about this change for any reason, contact your BASIC representative. We are here to help you in any way we can.
Q: Will BASIC distribute a participant communication regarding the OTC change?
A: BASIC will not be distributing an email communication directly to each participant. However, we have created a simple FAQ for BASIC participants that will be posted online. We will also be updating our Eligible Expense List on the employer and consumer portals within the next 10 business days. If you would like a copy of the BASIC participant FAQ to distribute internally, you can access it here: click this link. If you do distribute the notice internally, BASIC recommends you make it simple and include all employees, not just your current participants. This information may encourage non-participating employees to enroll in these great tax saving accounts in the future.
If you’re a current BASIC FSA, HRA, or HSA client, please don’t hesitate to reach out to your BASIC Customer Service Team if you have further questions or require assistance.
If you’re not a current BASIC FSA, HRA, or HSA client, and would like to learn more about BASIC’s employer benefit solutions, please click here!