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Take Advantage of COVID-19 Related Changes to Health Coverage Rules
by Roy Lamphier
December 19, 2022

The Coronavirus Aid, Relief and Economic Security (CARES) Act provided a variety of financial assistance to individuals and businesses, including for health expenses.

Among them were rule changes providing no-cost coverage for COVID-19 testing and expanded benefits for Consumer-Directed Health Plans (CDHP).

COVID-19 Diagnostic Testing

The Families First Coronavirus Response Act, H.R. 6201, requires all health plans offered by employers and insurance carriers to cover the following at no cost to plan members:

  • Diagnostic testing for COVID-19. It is not yet clear if self-administered tests will be covered by this mandate.
  • Health care provider office visits, urgent care center visits, and emergency room visits that result in an order form or administration of a diagnostic test for COVID-19. This includes telehealth visits.

At this time, the IRS has allowed qualified High Deductible Health Plans (HDHP) to pay for the treatment of COVID-19 prior to the annual deductible being met, however, it is not required. Details vary by plan so consult with your employer or your insurance provider for your specific coverage information.

This coverage requirement remains in effect only while there is a declared public health emergency as defined under federal law.

Expanded Benefits for Consumer-Directed Health Plans

The CARES Act contains these key provisions that affect health savings accounts (HSAs) and Flexible Spending Accounts (FSAs):

  • Over-the-counter drugs and medicines not prescribed by a physician are considered eligible medical expenses and can now be reimbursed pre-tax. This includes pain meds, allergy pills, and surgical masks which now can be purchased with consumer-directed funds without a prescription.
  • Menstrual care products are now considered eligible expenses. Examples include tampons, pads, liners, cups, sponges, or similar products. These are permanent changes and apply retroactively to purchases beginning Jan. 1, 2020.
  • Health plans may now choose to cover telehealth pre-deductible without impacting HSA eligibility. This change treats telehealth similar to other preventive care benefits. However, this provision is temporary and will sunset on Dec. 31, 2021, unless Congress extends it or makes it permanent.

The changes to eligible expenses are retroactively effective January 1, 2020. For a full list of qualified medical expenses, see IRS Publication 502.

Extended Deadline for HSA Contributions

People can make HSA contributions for 2019 up until the federal income tax filing deadline. Because of the pandemic, that deadline has been extended to July 15.

Using HSA Funds in the Event of Job Loss

An HSA belongs to the individual and thus the funds in an HSA account are theirs to keep even if they lose coverage or change jobs. Normally, people are not permitted to use funds in their HSA to pay for insurance premiums, however, in the event of job loss, there are two exceptions where it is permissible to use HSA funds to pay for health insurance premiums:

  • If it is continuation coverage (such as COBRA, which typically lasts 18 months after job loss).
  • Other coverage as long as the individual is receiving unemployment compensation under federal or state law.

Financing Personal Health Care

As the nation emerges from the pandemic, expect the health care costs of treating the virus to drive up costs for businesses and consumers in the form of higher premiums and out-of-pocket payments. The expanded ability to use tax-free funds to pay for over-the-counter drugs and possible virtual care and virus testing is an important upgrade in the ongoing effort to manage health care costs.

About the author
Roy Lamphier
Roy Lamphier is CEO of Excelerate America, a nationwide organization helping small businesses owners learn, connect and grow in order to thrive in the digital economy. Roy is also a licensed life and health agent, founder of HR ServiceLink, an employee benefits service and technology practice, and a former board member of the National Center for Health Value Innovation.
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