In these uncertain times, we are finding that participants are using their pre-tax benefits as a way to optimize savings and maximize allowable expenses. Since these unprecedented times are difficult to navigate, we are providing updates so that employers and participants can stay informed. Please see below for FAQs on regulatory changes, COVID-19 updates and other considerations. If you have further questions that are not addressed in these FAQs, feel free to reach out to our customer care team.
Please note: We’re monitoring the situation and updating as quickly as possible, but this page may not contain the latest information. Please review the CDC, DOL, and WHO websites for the most up-to-date information. The information on this page is for educational purposes only.
How has the list of eligible expenses changed due to COVID-19?
On Friday, March 27th, Congress passed the CARES ACT (COVID-3 Stimulus Bill). This act now allows OTC (Over-the-Counter) drugs and medicines to be purchased without a prescription for reimbursement from a Health Care FSA, HRA, or HSA. Take some time to track down your receipts – these expenses are eligible, retroactive to January 1, 2020. Some common examples of eligible items are:
Common cold, flu, and allergy medications
Feminine hygiene products are now eligible as well. Some common examples are:
Menstrual cups and sponges or similar products
Why isn’t my debit card working at merchants for these OTC items?
While you may submit these OTC items for manual reimbursement now, the debit card may not work at specific merchants for up to 4-6 weeks while stores update their systems.
121 Benefits is in the process of updating the online Eligible Expense Searchable List and all other eligible expense documents.
The FSA Store, the on-line retailer available through this link, is also in the process of updating their website with the new requirements.
Are testing expenses for COVID-19 covered by my medical plan?
COVID-19 Testing is now covered under all major medical plans with no copays, coinsurance, or deductibles. You can get tested at in-person clinics, Emergency Rooms, Urgent Care Centers, and Telehealth visits.
Dependent Care Accounts
I am laid off/not working right now and do not need daycare services. My child is out of school and needs daycare services as I am still working. Can I decrease/increase my election amount to my dependent care account?
Participants may change their election amount or stop contributing altogether per the IRS allowable event of a ‘change in the cost or coverage of the care.’ For eligibility, please keep in mind the following:
Participants must make the change within 30 days of the event (or a longer time period, if your plan document allows for that).
The change must not be less than the total contributions to-date.
No refunds of previous contributions are allowed.
Health Care & Limited Purpose Accounts
I have been laid off/my hours are being reduced due to COVID-19. Can I make a change to my Health FSA coverage?
If you are on a paid furlough or leave and your employer is keeping your benefits active, you are not able to change the election since you are still eligible for the Health FSA.
If you are on an unpaid leave of absence or furlough you may be able to continue your Health FSA coverage on an after-tax basis during the leave or upon return (by taking payroll deductions for the premiums missed). Unless you lose eligibility for benefits during the leave, you won’t be able to change your
I am losing benefits because of COVID-19. Is this a COBRA-qualifying event?
If you are laid off, or your hours are being reduced and you are losing eligibility for benefits as a result, you may elect COBRA to continue your Health FSA or Limited Purpose FSA on an after-tax monthly basis, provided that your account is underspent (total contributions are more than total claims paid to- date).
I am working from home and am not using parking and/or mass transit accounts. Can I make changes to my transportation account?
Unlike the Flexible Spending Accounts, participants may make changes to or stop/start contributing to parking and/or mass transit accounts at any time.
If participants are no longer using mass transit services but driving to work, consider direct contributions to a parking account.
Will I receive a refund for unused transportation contributions?
In some cases, individual merchants may offer refunds for contracts paid for March, April, or future months that will go unused. Participants should check with their provider and inquire about getting a refund made directly to their debit card or other credit cards. Merchants may have restrictions on the amount and timing of refunds. Please note that refunds apply only to payments made for contracts between merchants, not contributions deducted from paychecks.
I am laid off and receiving unemployment benefits. Can I use HSA funds to pay for health insurance premiums?
If you are laid off and receiving unemployment benefits, you may use HSA funds to pay for health insurance premiums under COBRA/Continuation.
Can I make after-tax contributions to 2019 Health Savings Accounts right now?
Yes, the IRS extended the deadline for participants to make after-tax contributions to July 15, 2020, to coincide with the extended tax filing date.
On Friday, March 27th, Congress passed the CARES ACT (COVID-3 Stimulus Bill). This act now allows OTC (Over the Counter) drugs and medicines including items such as Aspirin, Tylenol, cough, common cold, flu, and allergy medications to be purchased without a prescription for reimbursement from a Health Care FSA, HRA, or HSA. In addition, the act now allows menstrual care products, including tampons, pads, liners, cups, sponges or similar products, to be reimbursed. The change is effective immediately and is retroactive back to January 1, 2020.
How do my employees submit OTC items for reimbursement?
Your participants may now submit any eligible OTC item for reimbursement with the cash register receipt or other itemized documentation; no prescription from a physician or chiropractor is needed.
Please note that while participants may submit these OTC items for manual reimbursement now, the debit card may not necessarily work at specific merchants for up to 4-6 weeks while these stores update their systems.
Do I need to change my plan with this stimulus bill?
A plan amendment will be required in the future. We will contact you when the regulations are finalized and plan document language is available. In the meantime, plans may operate in accordance with the legislation now in “good faith.”
Are COVID-19 testing expenses covered by our medical plan(s)?
As part of the Families First Coronavirus Response Act (COVID-2), all major medical plans must cover COVID-19 testing expenses at in-person clinics, ERs, Urgent Care Centers, or Telehealth visits with no cost-sharing (i.e. no deductibles, coinsurance or copays).
How are HDHP (high deductible health plans) and HSA eligibility impacted?
With this act, employees are encouraged to seek treatment or testing for COVID-19 as HSA qualifying plans may provide these services with no deductible or a deductible below the minimum required deductible for an HDHP. Despite the ‘no or lower deductible’ requirement, HSA participants will remain eligible to make/receive contributions.
Dependent Care Accounts
Some employees have been laid off/furloughed or do not feel comfortable sending kids to a daycare program. Or, they have had to invest in daycare because of schools being closed. Can employees change their election amount or stop contributing altogether?
Yes, but participants must make the change within 30 days of the event (or a longer time period, if your plan document allows for that).
The change must not be less than the total contributions to-date. No refunds of previous contributions are allowed.
Health Care & Limited Purpose Accounts
My organization has had to lay off and/or furlough employees. What do employers have to consider for a Health Care or Limited Purpose Account?
If you are keeping benefits active during a furlough or paid leave, then participants will not be able to change the election since they are still eligible for the FSA.
If hours are being reduced and participants are losing eligibility for benefits as a result, then that is a COBRA-qualifying event. Those participants should be offered the opportunity to continue making contributions to their FSA after tax on a monthly basis, provided they have not overspent their account (total contributions are more than total claims paid to-date).
What if the employee is on an unpaid leave of absence?
If the employee is on an unpaid leave of absence, you will need to follow your standard practices per your Cafeteria Plan Documents and leave policies. Many employers offer employees the ability to continue coverage during an unpaid leave on an after-tax basis during the leave or upon return (by taking payroll deductions for the premiums missed). Unless the employee loses eligibility for benefits during the leave, they won’t be able to change the election. If they are losing benefits, then COBRA should be offered.
My employees are no longer commuting to work or they have stopped taking mass transit. Can they make changes to their transportation accounts?
Participants can stop or reduce contributions to either their parking or mass transit account at any time.
If participants are no longer using mass transit services but driving to work, consider having them direct contributions to a parking account.
Will participants be able to get refunds for advanced or unused payments?
In some cases, individual merchants may offer refunds for contracts paid for March, April or future months that will go unused. Participants should check with their provider and inquire about getting a refund made directly to their debit card or another credit card. Merchants may have restrictions on the amount and timing of refunds. Please note that refunds apply only to payments made for contracts between merchants, not contributions deducted from paychecks
The IRS extended the deadline for participants to make after-tax contributions to 2019 Health Savings Accounts to July 15, 2020, to coincide with the extended tax filing date.
Participants are laid off and receiving unemployment benefits. Can they use their HSA funds to pay for health insurance premiums?
Yes, they may use HSA funds to pay for health insurance premiums under COBRA/Continuation.
My organization makes employer contributions to HSAs. Should I change these employer contributions?
We recommend that these funds be accelerated or changed to accommodate a potential increase in COVID-19 or other medical-related expenses.
If you are not currently making an employer contribution, consider offering a one-time amount or smaller, incremental amounts over the course of the year.
Extend the Run-Out Deadline
How are employees going to get documentation submitted in time for the plan run-out period as many providers are closed?
There are no changes to grace periods or carryover amounts at this time. For our clients with a mid-year plan year, you may consider extending your plan’s run-out period. If your 2019 year run-out has not ended yet, you may want to consider extending the deadline. Doing so will require a simple plan amendment.
Active Participants with a 2020 Account
Participants made elections for the purpose of receiving certain services or surgeries and the provider is closed. How can they use their funds?
Participants are encouraged to look at other ways to use funds. Employees can also obtain OTC items available without a prescription. Refer here for a list of eligible expenses.
Another option for purchasing OTC items is to use the FSA Store, linked here. They sell only FSA/HRA or HSA eligible items.
Employees Retiring (or Leaving Employment) in 2020
There are employees retiring, being laid off, or are leaving soon and still have funds left to spend, but cannot see a provider because they are closed. Can they elect COBRA for their health FSA?
Yes, they can elect COBRA for their health FSA. COBRA (or the ability to make after-tax payments) is offered if an account is underspent (total reimbursements are less than total contributions at the time of the retirement or event date). Making these payments for as many months as needed during the plan year allows participants the ability to incur expenses beyond the retirement (or event) date.