What the CARES Act Coronavirus Relief Packages Means for Your HSA

With President Trump signing the CARES Act coronavirus relief bill into law on March 27, $2 trillion in emergency spending has been approved to help our nation deal with the coronavirus (COVID-19) pandemic.

Along with that massive amount of money come important changes to how you can use your health savings account during these unprecedented times.

Passing of the CARES Act is the Perfect Time for a Refresher on HSA Coverage and HSA-Eligible Expenses

The CARES Act offers some key expansions on how you can use your HSA throughout the coronavirus pandemic, and potentially beyond.

Let’s look at the coronavirus-related HSA updates:

• Coverage for COVID-19 testing and care–Bolstering IRS Notice 2020-15, all private insurance plans, including high-deductible health plans (HDHPs) with HSAs, are required to make all coronavirus tests free, as well as to cover COVID-19 treatments and vaccine based on the insurance plan—if and when a vaccine becomes available. Check out our previous coronavirus and your HSA blog post for more details.
• Coverage for telehealth and virtual healthcare services–The CARES Act provides an exemption which allows HDHPs with HSAs to cover telehealth and virtual healthcare services without losing HSA eligibility, further promoting social distancing. Additionally, if an individual participates in another arrangement that provides Telehealth and/or other remote care services they will not lose their HSA eligibility. This expanded on the relief provided by the IRS earlier this year, which would have only covered telehealth services related to COVID-19 testing or treatment.
• Eligibility for over-the-counter (OTC) medical products–Along with telehealth coverage, HSA users get another potentially sizeable savings boost from the addition of OTC medical products as HSA-qualified medical expenses. With this change, you have the ability to purchase nonprescription drugs and other OTC medical products with your tax-advantaged HSA funds without a prescription. Before this, you were only able to use your HSA funds for these purchases if you had a prescription from your healthcare provider. And an important point to note regarding this update—for the first time, feminine hygiene products are also included in the list of HSA-qualified OTC medical product expenses.

Coronavirus Pandemic and Beyond, Stay Informed on Your HSA

The coronavirus outbreak has made us revisit and rethink many things. When it comes to your health savings account, you now have expanded options for using your HSA, so you need to stay informed. And we’re here to help.

Whether you currently have an HSA with an HDHP, or whether you’re simply arming yourself with the knowledge to see if an HSA’s right for you during the COVID-19 pandemic and beyond, you may be surprised to find out all that falls under “HSA-qualified medical expenses” you can pay for using HSA funds.

Now more than ever, HSAs aren’t just for office visits and hospital care. Everything from ER visits and surgical costs, to dental expenses, mental health services, vision care, prescription drugs and more can all be paid for using your HSA. During the COVID-19 pandemic, even over-the-counter medications and nutritional supplements and other nonprescription medical products—including feminine hygiene products—can be paid for using your HSA.

Let’s take a look at just some of the lesser known expenses that qualify for payment using your HSA:

• Bandages and certain first-aid medical supplies
• Capital expenses for special medical equipment installed in your home
• Diagnostic devices
• Feminine hygiene products, like cups, liners, pads, sponges and tampons
• Legal fees related to medical expenses
• Long-term care services
• Meals at a hospital or medical facility if you’re there for medical care
• Over-the-counter medications and nutritional supplements
• Oxygen
• Psychoanalysis and psychologist charges
• Telehealth and virtual healthcare services
• Therapy received as medical treatment
• Transportation, lodging and trips primarily for and essential to medical care

On the counterpoint, let’s take a quick look at some of the expenses that don’t qualify for payment out of your HSA, even during the coronavirus pandemic:

• Babysitting and childcare costs for a normal, healthy child
• Medicines and drugs from other countries
• Personal care items like toilet paper and soap

For a complete list of HSA-qualified and nonqualified expenses, view IRS Publication 502.

Preventive Care List for HSA Participants Keeps Expanding—and Now Includes Testing for Coronavirus

In July of 2019, the IRS expanded the list of preventive care for HSA participants to include certain care for chronic conditions. Everything added in the July 2019 IRS preventive care list update for chronic conditions is now covered as preventive care in 2020. As of March 11, 2020, testing related to coronavirus is also eligible to be covered pre-deductible.

This expansion of preventive care coverage for chronic conditions and COVID-19 care can be a potential game-changer for existing HSA users, as well as for anyone who’s previously shied away from considering switching to a high-deductible health plan (HDHP) with an HSA.

Typically, your HDHP can’t provide benefits for any medical expenses in any given year until you meet your minimum deductible for that year. However, when the expense is for qualified preventive medical care, you’re able to bypass your deductible—meaning you receive immediate benefits for any care that falls under preventive care. This can equal substantial annual savings for those dealing with coronavirus or managing chronic medical conditions. And it’s important to note, it’s not just medical care services for these chronic conditions that’s covered as preventive—it’s also items purchased like prescription drugs.

Coronavirus testing and telehealth aside, preventive care is available in 2020 for HDHP with HSA participants who manage conditions such as:

• Asthma
• Bleeding disorders
• Congestive heart failure
• Coronary artery disease
• Diabetes
• Heart disease
• Hypertension
• Liver disease
• Osteopenia
• Osteoporosis

For more details on this preventive care list expansion, as well as a complete list of diagnoses and qualified preventive care, view IRS Notice 2019-45. For more details on the IRS statement on coronavirus coverage, view IRS Notice 2020-15. And be sure to check our recent blog post for what’s new for HSAs in 2020.

A Reminder – Coronavirus won’t Negatively Impact Your HDHP or HSA

Remember, all testing related to the coronavirus (as well as treatment, depending on your insurance provider) can be covered pre-deductible through your HDHP, and won’t violate HDHP rules or negatively impact your HDHP and HSA in any way. Simply put, if you end up needing testing for the coronavirus, you won’t have to satisfy the minimum deductible requirements typically laid out for your HDHP—all testing will be covered under the umbrella of preventive services. And if you need treatment, that can be covered pre-deductible as well, but you’ll need to check with your insurance provider on how they’ll handle your coverage.

COVID-19 testing or treatment, when it comes to your HSA, it won’t affect your HSA eligibility or ability to make or receive HSA contributions—or any other HSA advantages— in any way. All your HSA benefits will remain intact.

Navigate Through the Coronavirus Pandemic and Take Control of Your Healthcare with Help from Bend HSA

We’re all facing uncertainty in the days and months ahead. But one thing you can be certain of is that a health savings account is an awesome way to save big on taxes while boosting your bottom line and bettering your overall financial health. Your HSA contributions aren’t taxed, your HSA contributions grow tax-free and any withdrawals from your HSA for qualified medical expenses are also tax-free. Not to mention that with a Bend HSA, you can also make investments with your funds just like a 401(k) once your HSA balance reaches $1,000. And remember, even if you end up dealing the COVID-19 directly, your expenses related to care and treatment will be covered.

With a Bend HSA, we make it easy for you to get control over your healthcare costs and make the most of your HSA this time and any time. If you’re already leveraging the Bend HSA advantage, thank you for your partnership. And if you’re not, but ready to experience the best an HSA has to offer, get started today.

For more general information and resources on the coronavirus and developments related to the pandemic, visit the CDC’s website, the World Health Organization’s coronavirus site or your specific state’s Department of Health online.

And remember, we’re here to help. Get in touch with any questions you have on HSAs—we’re here for you. And we’ll be in touch with any further developments regarding the coronavirus, HDHPs and HSAs.