COVID-19 Updates and FAQs
Many of the links below are provided by our software partner Alegeus.
Tax credits for required paid leave - the required sick leave for employees is reimbursable to employers through tax credits. See the blog and the IRS site for how FSAs, HRAs, and HSAs may impact the credit.
FAQs about compliance related to FSA, HRA, and HSA accounts as well as COBRA. Two of the most common questions we have heard are listed below:
If employees are on furlough or temporary leave what happens to the accounts and how does COBRA apply? This depends on if the absence is covered under FMLA or non-FMLA. Under FMLA, benefits must be offered during the absence. Employers can collect premiums for benefits by prepayment, on an ongoing basis, or upon return to work. Some employers may maintain benefits for non-FMLA leave under the same conditions as FMLA (see above).
Some employers might cover the employee’s cost share while on FMLA or non-FMLA leave - for example cover the employee portion of the Health FSA while away so that the FSA can be accessed during the leave. Employers should treat employees equally and specify the policy in writing.
COBRA applies if a person loses coverage due to reduced hours or termination.
Can employees change Dependent Care FSA (DFSA)? The rules for changing DFSA elections are flexible. Examples of situations that allow a change or drop of coverage include change of provider, dropping a provider due to closure, dropping the service due to the child being cared for at home, and initiating coverage.
The Coronavirus Aid, Relief and Economic Security (CARES) Act was signed March 27, 2020 and includes the following changes to tax favored accounts effective January 1, 2020:
FSAs, HRAs, and HSAs can reimburse or pay for Over-the-Counter (OTC) purchases of drugs and medicines without a prescription. Note - merchants should be updating their card systems beginning April 15 to allow cards to be used for these items. Each merchant updates their eligibility list monthly, quarterly or yearly so card acceptance will depend on the merchant. Participants can file manual claims in the meantime.
Menstrual products were added to the list of qualified medical expenses covered by FSAs, HRAs, and HSAs. Note - merchants should be updating their card systems beginning May 15 to allow the card to be used for these items. Each merchant updates their eligibility list monthly, quarterly or yearly so card acceptance will depend on the merchant. Participants can file manual claims in the meantime.
Telehealth services below the deductible will be allowed in HSA-compatible health plans through December 31, 2021.
Due to the federal tax filing and payment deadline extension to July 15, 2020, contributions to Health Savings Accounts (HSAs) are allowed for the 2019 tax year until July 15, 2020.
Families First Coronavirus Response Act - effective no later than April 2, 2020 provides paid sick leave to employees affected by COVID-19. See Department of Labor page for more info.