BASIC FSA Alert: CARES ACT - OVER-THE-COUNTER DRUGS & MEDICINES
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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 Heath 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 FAQ to help
you understand what this change means and explain what steps we have taken to
enhance your service with BASIC.
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 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 our portal). 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 employers 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. 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 employers 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 we 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, we will notify you at that time.
Q:
What if an employer does not want to allow this change?
A:
If you are 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 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 employee FAQ to distribute internally, you can
access it here: click this link.
If you do distribute the notice internally, we recommend 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.
Please don’t hesitate to reach out to us if you have further
questions or require assistance.
Sincerely,
Your BASIC Team
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