What Does the CARES Act Mean For Health Spending Accounts?

On March 27, 2020, President Donald Trump signed the $2 trillion emergency spending bill, the Coronavirus Aid, Relief, and Economic Security (CARES) Act. This new law amounts to the largest stimulus package in U.S. history, and is aimed at providing economic relief to American workers, families and businesses impacted by Coronavirus.

In particular, there are two key areas in the CARES Act that benefit managers and HR Directors should take notice of: the first is a safe harbor provision that allows health plans to provide  no cost telehealth access without a high deductible health plan (HDHP) deductible being met. The second area allows certain over the counter (OTC) products to be qualified medical expenses without needing a prescription.

In addition, feminine care products are now considered OTC and reimbursable by a medical spending account. We tackle each of these two key CARES Act provisions further below:


With the CARES Act, fully insured and self-insured plans have the opportunity to expand telehealth at no cost to their members. This safe harbor for HDHP paired with health savings accounts (HSAs), allows members the opportunity to leverage telehealth that are offered at no cost, without penalty and without having to meet their yearly deductible. The safe harbor is effective for plan years on or before December 31, 2021.

OTC Purchases

The CARES Act also includes a provision that, in addition to allowing certain over-the-counter drugs obtained without a prescription to be qualified medical expenses, allows certain over-the-counter feminine menstruation products to be a qualified medical expense. This is true for anyone with a health care spending account including an HSA, flexible spending account (FSA), health reimbursement arrangement (HRA), and voluntary employee beneficiary association (VEBA). With the passage of the act, reimbursement is available retroactively to purchases made after 12/31/2019 and is a permanent change.

The CARES Act makes over the counter medicine an eligible expense for HSA and FSA plans

Additional COVID-19 related acts may occur in the near future. Further will continue to share pertinent change in regulations.

Visit the COVID-19 FAQs for more information.

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