The rapid spread of coronavirus (COVID-19) has everyone on high alert. However, as consumers and caregivers are taking steps to protect themselves by buying essentials like over-the-counter drugs to prevent and manage symptoms, many were limited from paying for those expenses with their flexible spending account (FSA) or health savings account (HSA) funds.
That changed recently with the passage of the CARES Act, which included a provision that expanded product eligibility for FSAs and HSAs to include over-the-counter (OTC) medications and menstrual care (more commonly known as feminine care) products.
(Related: After Open Enrollment: 5 Tips to Help Employees Wisely Use Their Benefits)
According to Aite Group, there are currently more than 60 million people in America who are enrolled in FSAs and HSAs — many of whom participate through their employers, along with many others who learned about the benefits of these accounts through independent financial advisors and insurance agents. These individuals and families rely on spending account dollars to manage the skyrocketing costs of care, including protecting themselves from the spread of viruses like COVID-19.
For financial advisors and independent insurance agents, this is one of the most significant changes to tax-advantaged accounts in years, and there’s a great opportunity to help showcase just how meaningful these accounts can be for the health and financial bottom line of current and prospective clients.
Here are some key points advisors can share to help clients better understand the value of their FSA or HSA and how they can use these accounts to save money on everyday health needs throughout the year.
Newly eligible products
OTC medications. Previously, the Patient Protection and Affordable Care Act (PPACA) required account holders to obtain a prescription (Rx) to purchase common OTC medicines like Tylenol, Advil, and Claritin with an FSA or HSA. Not only did this greatly hamper the ability of Americans to use their tax-advantaged funds to protect themselves during crises like COVID-19, but it generated additional healthcare costs due to increased doctor’s office visits.
Why does it matter? Many products that may be used to treat the symptoms of COVID-19, influenza, cold and flu season, and seasonal allergies are classified as OTC medicines. In fact, sales for OTC medications reached $35 billion in 2018, and recommendations that consumers keep at least a one-month supply of OTC pain medications on hand to treat flu symptoms is increasing demand for these products. When it comes to FSAs and HSAs, eligibility of OTC medications has consistently been one of the most-asked questions and an area of confusion for account holders of all ages.