COVID-19 and Your HSA

As COVID-19 impacts healthcare and our daily lives, important changes have been made to your Health Savings Account (HSA) to make it easier to get the care you need, while managing your healthcare expenses.  During this time, it’s also important to remember—and take advantage of—all the benefits your HSA has to offer.

See below for details on:

• Expanded benefits, including HSA coverage for over-the counter medications and employer health plan coverage for COVID-19 diagnostic testing
• Extended deadline for 2019 HSA contributions
• Job loss and HSA coverage
• Your HSA triple-tax advantage
  

HSA Coverage Updates

Recently, the IRS relaxed some rules concerning over the counter medications, telehealth and other remote-care services.

Expanded HSA Benefits

The CARES Act, which was signed on March 27, contains these key provisions that affect health savings accounts:

• Over-the-counter drugs and medicines not prescribed by a physician are considered eligible medical expenses and can now be reimbursed pre-tax.
• Menstrual care products are now considered eligible expenses. Examples include tampons, pads, liners, cups, sponges or similar products.
• Health plans may now choose to cover telehealth pre-deductible without impacting HSA eligibility.
  

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

COVID-19 Diagnostic Testing

In addition, H.R. 6201, the Families First Coronavirus Response Act, was signed into law. It 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.
• Health care provider office visits, urgent care center visits, and emergency room visits that result in an order for or administration of a diagnostic test for COVID-19.

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.  Please consult with your employer or your insurance provider for your specific coverage information.

Note: The legislation and the relief it describes last only as long as the emergency.

Extended Deadline for Contributions

The IRS issued Notice 2020-17 on March 18, which extends the 2019 tax year’s filing date from April 15 to July 15. This is also good news for HSA accountholders, as you now have until July 15, 2020, to make contributions for 2019.

2019 Contribution Limits
Single	$3,500	$3,500
Family	$7,000	$7,000
Catch-up contribution (55 and older)	$1,000

Job Loss: How an HSA Helps

One of the key advantages of an HSA is that it is yours. If you leave or lose your job, the funds in your HSA account are yours to keep. Normally, you are unable to use your funds from your HSA to pay for healthcare premiums. However, if you lose your job, there are two exceptions where you can use your HSA to pay for healthcare:

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

Other Key HSA Advantages

Just a reminder—your HSA is:

• The only triple tax advantage product
  • Contributions up to the annual limit are never taxed
  • Interest earnings accumulate tax-deferred
  • Distributions used for qualified medical expenses are tax free
• An account where the funds do not expire; they roll over from year to year