What is the CARES Act?
The Coronavirus Aid, Relief, and Economic Security (CARES) Act is a piece of legislation that was passed in March 2020, at the outset of the historic COVID-19 pandemic.
The $2 trillion law allocated $350 billion to help small businesses keep workers employed amid the pandemic and economic downturn, including the introduction of the Paycheck Protection Program (PPP).
How Does the CARES Act Work?
The CARES Act is an economic relief package that included the following components:
- Assistance for American Workers and Families: Including direct payments to individuals and families under a certain income threshold
- Assistance to Small Businesses: The CARES Act established the PPP, which allocated loan funds for small businesses to supplement diminished income as a result of coronavirus-related
- Job Preservation Measures: Generally, these efforts included tax credits and other economic incentives to keep employees on payrolls
- State, Local, and Tribal Government Assistance: To help fight the spread of COVID-19
What Other Changes Did the CARES Act Make?
Each of the three main changes to medical spending accounts made by the CARES Act makes it easier for individuals with HSAs, FSAs, and HRAs to pay for necessary medicine and healthcare products. These adjustments are much-needed given the ongoing coronavirus challenges that families face.
The three changes include:
- Menstrual Care Products Are Now Qualified Expenses: HSA, FSA, and HRA owners can now use funds to buy items like tampons and menstrual pads.
- OTC Prescription Requirement Removed: The Affordable Care Act (ACA) previously mandated that a doctor’s prescription was required to pay for over-the-counter medicine using HSA, FSA, and HRA funds. The CARES Act removed this provision.
- High-Deductible Health Plans (HDHP) Cover Remote Medical Services: Telemedicine and other online medical services can be covered with HSA funds before a deductible has been met. Unless extended, this update will expire Dec. 31, 2021.
Changes 1 and 2 are permanent, effective retroactively beginning Jan. 1, 2020.