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What New Over-The-Counter Products Are Available Under the CARES Act?

Since the passage of the Affordable Care Act (ACA), many employers and participants have bemoaned the elimination of over-the-counter (OTC) medications as qualified medical expenses for Flexible Spending Accounts (FSA), Health Savings Accounts (HSA), Health Reimbursement Arrangements (HRA), and Archer Medical Savings Account (MSA). The recent passage of the CARES Act, however, has brought relief by permanently restoring over-the-counter medications as qualified medical expenses effective January 1, 2020.

It has been nearly 10 years since participants have had access to OTC medications without a prescription through their pre-tax contributions to FSAs, HSAs, HRAs, and MSAs. Do you remember which OTC medications your consumer account can and cannot reimburse as a qualified medical expense?

The IRS defines a qualified medical expense as:

the costs of diagnosis, cure, mitigation, treatment, or prevention of disease, and for the purpose of affecting any part or function of the body. They include the costs of equipment, supplies, and diagnostic devices needed for these purposes. Medical care expenses must be primarily to alleviate or prevent a physical or mental disability or illness. They don't include expenses that are merely beneficial to general health.”

Here is a non-exhaustive list of OTC products that are reimbursable through an FSA, HSA, or HRA.

  • Menstrual Care Products
  • Breast Pumps and Supplies
  • Diagnostic Devices
  • Fertility and Pregnancy Devices
  • Medicines and Drugs
  • Wigs (Upon Physician Advice)
  • Orthotic Devices
  • Braces & Supports
  • Foot Care
  • Birth Control
  • Bandages
  • Dental Treatment & Care
  • Eyeglasses & Eye Care
  • Hearing Aids and Maintenance
  • Certain Dietary Foods and Beverages
  • Medical Vitamins and Supplements
  • Sunscreens
  • Canes, Crutches and Wheelchairs
  • Incontinence Products
  • Pain Management

What is not covered?

  • Vitamins for General Health
  • Cosmetic Procedure
  • Hair Removal or Restoration
  • Maternity Clothes
  • Teeth Whitening
  • Controlled Substances
  • Diaper Services
  • Health Club Memberships
  • Personal Use Items (i.e. toothpaste)
  • Weight Loss Products

Despite COVID-19 placing most of the country under shelter-in-place orders, consumers can still make eligible purchases online. Many large retailers, such as CVS, Amazon, Walmart, Target, and Walgreens, have dedicated FSA/HSA shops highlighting all of their eligible products.

For additional guidance on the CARES Act and the valuable relief it brings to employers and their employees, visit OneDigital’s Stimulus Guidance for Employers page, or reach out to your local OneDigital advisory team.