What Can FSA Be Used For?
A Flexible Spending Account (FSA), also known as a cafeteria plan, is an employer sponsored benefit that allows employees to set aside money on a pretax basis for eligible or qualified expenses. Traditional qualified expenses for Medical FSAs included insurance deductibles, co-pays and coinsurance, prescriptions, and dental and vision expenses. FSAs got even more flexible in 2020, thanks to the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) signed into law on March 27, 2020.
Eligible Expenses After CARES Act
The new regulations add non-prescription over-the-counter (OTC) drugs and menstrual products to the list of qualified FSA eligible expenses. These additions are a welcome change for participants, as the CARES Act permanently eliminates an ACA-imposed restriction that required employees to obtain a prescription in order to be reimbursed for non-prescription OTC drugs and medicines from a Medical FSA, HSA, and certain HRA plans. Some OTC items remain ineligible, such as vitamins and supplements, and still require a physician’s “prescription” indicating that they are intended to treat a diagnosed medical condition (e.g., anemia) rather than for general health and wellness.
Examples of newly eligible items include:
- Over-the-counter drugs and medicines such as pain relievers, cold and flu medications, antacids, acne remedies, allergy medications, and more
- Menstrual products such as tampons, pads, liners, cups, sponges, and more
Eligible Expense Resources
- The BASIC Medical FSA Election Worksheet offers a great visual of eligible expenses for Medical FSAs.
- For a full accounting of Medical FSA eligible expenses, view the FSA Store’s Eligibility List.
It’s essential that employers know about these changes, since they improve the value of their employees’ benefit plan. Make sure your employees know that OTC drugs & medicines and menstrual products are now eligible for reimbursement before they enroll and elect for the next plan year.
BASIC FSA Administration offers benefits for all employers looking to simplify their benefits administration, including updating plans to keep up with constantly changing regulations like the CARES Act!
