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COVID-19 Frequently Asked Questions

The disruptions caused by COVID-19, the novel coronavirus, are making many people wonder how their spending accounts are impacted. This guide provides answers to many questions being asked.

We've compiled a list of commonly asked questions from members and employers due to COVID-19. Check back often, as we’ll continue to update this page with the questions/responses as they come in. If you have a specific question that is not addressed, or need more information, please contact our service team

Members

Here are answers to common questions members are asking regarding COVID-19 and their spending accounts.

Has the IRS expanded the eligible expenses list due to COVID-19?
Yes, medical spending accounts are now allowed to reimburse for over-the-counter (OTC) items. The funds can now be used to purchase certain OTC items and feminine hygiene products without a prescription from a physician. This change occurred on March 27, 2020 as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act that Congress passed. This is a permanent change to the eligible expenses list, and includes retroactive purchases made after 12/31/2019. The updated list of eligible expenses will be ready on April 15, 2020 for OTC and feminine care products.
Why is my debit card getting declined when I purchase a newly approved eligible expense item? What should I do?
Further now allows for these newly approved eligible expenses and we have made the updates. However, the mechanism that allows medical spending account debit cards to work is dependent on SIGIS, an organization that manages the global transaction approval system for eligible expenses. Until the national systems catch up with the new eligible expenses, members should manually submit for reimbursement from their accounts.

Dependent Care Assistance Program (DCAP)

I am not working at this time due to the COVID-19, can I decrease my DCAP election amount as I do not need daycare services right now?
Yes, the COVID situation provides several possible reasons to allow an election change. For example, the IRS allows an election change for:
  • Reductions in hours
  • Change in employment status
  • FMLA leave
  • Substantial change in employer benefits/cost
  • Change of cost from the provider
  • Change of provider resulting in change of cost
For more information on how to make an election change, or to download the qualifying event form, visit our DCAP Elections Change Events page.
My child’s school is closed due to the COVID-19, I still must work though, can I increase my DCAP election?
The election may be increased if the child being unable to attend school results in an increase in daycare expenses. For example, both spouses work during the school year and one does not work when school is out, so they never needed day care until now.
For more information on how to make an election change, or to download the qualifying event form, visit our DCAP Elections Change Events page.
What happens if I get laid off or terminated and my employer terminates my DCAP?
You can still submit claims for expenses through the end of the plan year and you have until the claim’s submission deadline set by your employer to submit them. You can get reimbursed only for the amount you have paid in.
My daycare is currently closed due to COVID-19. Do I still need to provide valid documentation for reimbursement on my DCAP?
The IRS requires appropriate documentation for reimbursement from your DCAP. Unfortunately, we are not be able to process claims until we have appropriate documentation on file.

Medical Flexible Spending Account (FSA)

I am not working at this time due to the COVID-19, can I decrease my FSA election amount?
Yes, the COVID situation provides several possible reasons to allow an election change. For example, the IRS allows an election change for:
  • Reductions in hours that causes loss in coverage
  • Change in employment status
  • FMLA leave
  • Substantial change in employer benefits/cost
For more information about making an election change, or for the Qualifying Event Notification Form, visit the FSA Election Change Events page.
What happens if I get laid off or terminated and my employer terminates my FSA?
You can still submit claims for expenses up to the termination date of the FSA, and you have until the claim’s submission deadline set by your employer to submit them.
If I go on COBRA, can I still use my FSA?
If you go on COBRA for your insurance, you are also able to go on COBRA for your FSA if you continue to pay into the FSA on a post-tax basis; however, you are not required to go on the FSA COBRA plan (they are two separate plans.)
I have increased medical expenses due to the COVID-19, can I increase my FSA election amount?
Unfortunately, no, an increase in medical expenses does not qualify as a reason to increase your FSA election amount.
Has the IRS expanded the eligible expenses list due to COVID-19?
Yes. FSAs can now be used to purchase over-the-counter (OTC) medical products and feminine hygiene products without a prescription from a physician. This change occurred on March 27, 2020 as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act that Congress passed. This is a permanent change to the eligible expenses list, and includes retroactive purchases made after 12/31/2019. The updated list of eligible expenses will be ready on April 15, 2020 for OTC and feminine care products..
Why is my debit card getting declined when I purchase a newly approved eligible expense item? What should I do?
Further now allows for these newly approved eligible expenses and we have made the updates. However, the mechanism that allows medical spending account debit cards to work is dependent on SIGIS, an organization that manages the global transaction approval system for eligible expenses. Until the national systems catch up with the new eligible expenses, members should manually submit for reimbursement from their accounts.
My provider’s office (e.g., dentist office) is currently closed due to COVID-19. Do I need to still provide documentation to substantiate my claim?
The IRS requires appropriate documentation for reimbursement from your health spending or savings account(s). However, given the circumstances surrounding COVID-19, you may want to contact our customer service department for assistance or any temporary changes or updates.

Health Savings Account (HSA)

I am not working at this time due to the COVID-19, can I change my HSA election amount?
Yes, you can update your elections at any time with your employer, for any reason. You can also contribute directly to your HSA if payroll deduction is not an option. This will be an above the line tax deduction when you file your 2020 taxes.
I heard there is an extension for filing federal income tax returns and making federal income tax payments. How does this affect my HSA?
Notice 2020-17 states that any person with a federal income tax payment or a federal income tax return due April 15, 2020 is eligible for relief on their federal income tax return payment. For an affected taxpayer, the due date for filing federal income tax returns and making federal income tax payments due April 15, 2020 has been automatically postponed to July 15, 2020. This relief grants all HSA account holders the option to make contributions to their 2019 HSA at any time up until the new deadline of July 15, 2020.
Can I use telehealth services at no cost now due to COVID-19?
We encourage you to check with your health plan provider to see what coverage is.
I made an excess contribution to my HSA in 2019. Can I avoid the 6% excise tax if I withdraw the excess amount by July 15, 2020?
Yes, if your contributions aren’t made to your HSA through a salary reduction and you don’t take a deduction for the excess contribution when you file your tax return. If you file your return by July 15, 2020, and don’t withdraw those excess contributions by that date, you can still avoid the excise tax if you withdraw the excess (and income on the excess amount) by October 15, 2020.

Health Reimbursement Arrangement (HRA)

What happens if I get laid off or terminated and my employer terminates my HRA?
You can still submit claims for expenses up to the termination date of the HRA, and you have until the claim’s submission deadline set by your employer to submit them. If you go on COBRA for your insurance, your HRA will continue with it.

Commuter Benefits (TRA)

Can I change my election for May?
If you need to change your election for May, you must do so no later than April 4 if you do not want the benefit to renew automatically for May.
Note that, if you are certain that you will not use your May order for commuting, you may Opt-Out of the month.
How can I Opt-Out for specific months?
To opt out for specific months, log in to your commuter benefits account and locate your order on the dashboard. Under Options, click ‘Edit Order’. Under the question, ‘Are there any months you do not need this order?’ select the month(s) you need to opt out. Note, you can also change your product to our prepaid card as an alternative product to your transit pass. Funds on the card do not expire and can be used at any time. Check with your HR Administrator to see if this option is available.
Can I use parking funds for future services?
  • If you chose a parking reimbursement, VISA card, or other election that allows carryover, you will be able to use those funds for future services.
  • If you chose a voucher, pre-paid transit pass, or payment to be sent to a parking ramp, that will continue to process as usual.

Groups

Here are answers to common questions groups and employers are asking regarding COVID-19 and their employees' plans.

What does the CARES Act entail?
On Friday, March 27, 2020, Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act. As part of this legislation, section 3702 allows HRA/FSA/HSAs to be used to purchase over-the-counter medical products and feminine hygiene products without a prescription from a physician. In addition, the law creates a safe harbor that allows a high deductible health plan to cover any telehealth service without a deductible requirement for plan years beginning on or before December 31, 2021. Check with your health plan or employer to see if the plan will be covering these costs.
How does the new rule issued by the DOL impact health spending and savings accounts?
On April 28, 2020, the Department of Labor issued a rule that extends many deadlines under the Employee Retirement Income Security Act (ERISA) and the Internal Revenue code. This rule impacts group health plans, disability and other welfare plans, pension plans, and participants and beneficiaries of these plans during the COVID-19 national emergency. This includes extending deadlines for FSA, HRA, and VEBA for employees filing claims for benefits and initial disposition of claims. TRA, DCAP and HSA deadlines have not been impacted by this rule.
Have there been any changes to allow election changes, grace period extensions or rollovers due to COVID-19?
On May 12, 2020, the IRS issued additional guidance for health savings accounts (HSAs), flexible spending account (FSAs), and Dependent Care (DCAPs) products due to COVID-19. This includes permitting employees to apply remaining unused FSA or DCAP amounts at the end of a grace period or plan year ending in 2020 to pay or reimburse medical care expenses or dependent care expenses incurred through December 31, 2020, and raising the FSA rollover amount to $550, effective for the 2020 plan year. The mid-year election changes and grace period extension are up to the employers to offer and are not mandatory, and employers may set limits on the frequency and timing if offering these election change options. If election or grace period changes are made, they require a plan amendment be adopted by December 31, 2021.
Can my employees start using telehealth for free as part of the CARES Act legislation change?
It is up to the health insurance company or the sponsor of a self-insured plan to determine whether they will change their plan design and use this safe harbor. While many health plans have begun to offer telehealth at no cost, check with your health plan to verify coverage.
Is a furloughed employee still eligible for a spending account like a DCAP, FSA, or HSA?
Eligibility for benefit coverage is determined by the benefit plan documents. Often, plan documents will provide that coverage is not lost if the furlough is paid. Often an unpaid furlough will lead to a loss of coverage unless the leave is protected such as is the case in FMLA leave.
Can a furloughed employee continue to submit claims for reimbursements?
If employees are still covered during furlough, then medical FSA claims can still be submitted for reimbursement.
Do we need to update our plan documents if we want employees to be able to use their spending accounts to purchase over the counter medicines and feminine care products?
We advise you check your benefit plan document and review what it defines as an eligible medical expense. If the language is broad, then no amendment should be needed (e.g., if it says it covers all section 213(d) expenses). You should review your plan documents with your benefits counsel to determine if an amendment is necessary.

Dependent Care Assistance Program (DCAP)

Can my employees decrease their DCAP election amounts due to the COVID-19?
Yes, the COVID situation provides several possible reasons to allow an election change. For example, the IRS allows an election change for:
  • Reductions in hours
  • Change in employment status
  • FMLA leave
  • Substantial change in employer benefits/cost
  • Change of cost from the provider
  • Change of providers resulting in change of cost

For more information on how to make an election change, or to download the qualifying event form, visit our DCAP Elections Change Events page.

My employee’s child’s school is closed due to the COVID-19, and the employee still must work, can they increase their DCAP election?
The election may be increased if the child being unable to attend school results in an increase in daycare expenses. For example, both spouses work during the school year and one does not work when school is out, so they never needed day care until now.

For more information on how to make an election change, or to download the qualifying event form, visit our DCAP Elections Change Events page.
What happens if an employee is laid off or terminated and we terminate their DCAP?
The employee can submit claims for expenses incurred through the end of the plan year and has until the claims submission deadline to submit them. The employee may be reimbursed only for the amount they have paid in.

Medical Flexible Spending Account (FSA)

My employee is not working at this time due to the COVID-19, can they decrease their FSA election amount?
Yes, the COVID situation provides several possible reasons to allow an election change. For example, the IRS allows an election change for:
  • Reductions in hours that causes loss in coverage
  • Change in status
  • FMLA leave
  • Substantial change in employer benefits/cost

For more information about making an election change, or for the Qualifying Event Notification Form, visit the FSA Election Change Events page.

My employee has increased medical expenses due to the COVID-19, can they increase the FSA election amount?
Unfortunately, no, an increase in medical expenses does not qualify as a reason to increase your FSA election amount.
What happens if we terminate an employee’s FSA due to layoff or termination of employment?
Employee can still submit claims for expenses up to the termination date of the FSA and will have until the claims submission deadline to submit them. If the employee goes on COBRA for insurance, the employee is also able to go on COBRA for the FSA if they continue to pay into the FSA on a post-tax basis, or if they choose to allow a pretax deductions from their last paycheck; however, they are not required to go on the FSA COBRA plan. Those are two separate plans.
What does the CARES Act entail?
On Friday, March 27, 2020, Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act. As part of this legislation, section 3702 allows FSAs to be used to purchase over-the-counter medical products, including those needed in quarantine and social distancing, and feminine hygiene products, without a prescription from a physician.
Can I use money received through the COVID-19 legislation business grant/loan program to pay FSA employee contributions?
A business that uses federal loans to pay for an FSA contribution may not have to be repaid. For more information, visit the IRS' Small/Mid-sized Business Tax Credits FAQs page.
Can members decrease their medical FSA election because many providers are not open and elective surgeries are not available?
No, the lack of providers and/or availability of elective surgeries are not qualifying election change events for FSAs.
 

Health Savings Account (HSA)

My employees are not working at this time due to the COVID-19, can they change HSA election amounts?
Yes, employees can update elections at any time with you. Employees can also contribute directly to their HSA if payroll deduction is not an option. This will be an above the line tax deduction when they file their 2020 taxes.
What does the Senate CARES Act entail?
On Friday, March 27, 2020, Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act. As part of this legislation, section 3701 allows high deductible health plans with a HSA to cover telehealth services prior to the deductible. In addition, section 3702 allows HSAs and flexible spending accounts (FSAs) to be used to purchase over-the-counter medical products, including those needed in quarantine and social distancing, and feminine hygiene products, without a prescription from a physician.
Can an employee use their HSA to pay their health insurance premium? 
An employee can use their HSA to pay their health insurance premium, as long as they are receiving unemployment benefits. This would apply even if the employer continues to cover a portion of the health insurance premium.

Health Reimbursement Account (HRA)

What happens if we terminate an employee’s HRA due to layoff or termination of employment?
Your employees can still submit claims for expenses up to the termination date of the HRA and has until the claims submission deadline to submit them. If the employee goes on COBRA for insurance, the HRA continues with it.
Can I use money received through the COVID-19 legislation business grant/loan program to pay HRA employee contributions?
A business that uses federal loans to pay for an HRA contribution may not have to be repaid. For more information, visit the IRS' Small/Mid-sized Business Tax Credits FAQs page.

Commuter Benefits (TRA)

My employees will no longer use the transportation benefit for the month of March and possibly April, can they change their elections?
Unfortunately, at this time our transportation partner has not made changes to the deadline to make elections. Employees will not be able to make changes for the current month and elections for April were due by March 4. At this time changes will not be allowed.
  • If the employee chose a parking reimbursement, VISA card, or other election that allows carryover, they will be able to use those funds for future services.
  • If the employee chose a voucher, pre-paid transit pass, or payment to be sent to a parking ramp, that will continue to process as usual.
  • Employees who need to change their election for May, must do so no later than April 4.
  • Employees who have chosen to have their elections renew automatically each month must make any changes no later than April 4 if they do not want the benefit to renew automatically for May.

This content is for informational purposes only, you should not construe this information as legal, tax, investment, or financial. Please consult your legal or tax advisor to review the specifics of your situation.

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