CARES Act
The 2020 law that expanded HSA-eligible expenses to include over-the-counter medications and menstrual products.
What is CARES Act?
The CARES Act (Coronavirus Aid, Relief, and Economic Security Act) was passed in March 2020 and included important changes to HSA-eligible expenses. The law permanently expanded what qualifies for tax-free reimbursement.
Before the CARES Act, over-the-counter medications required a prescription to be HSA-eligible. Now, OTC medications like pain relievers, cold medicine, allergy medications, and antacids are all HSA-eligible without a prescription.
The CARES Act also made menstrual care products (tampons, pads, menstrual cups, etc.) HSA-eligible for the first time. These changes apply to FSAs and HRAs as well, giving all health account holders more flexibility in how they use their funds.
Frequently Asked Questions
What did the CARES Act change for HSAs?
It made over-the-counter medications and menstrual products HSA-eligible without requiring a prescription.
Do I need receipts for OTC medications now?
Yes. Even though OTC medications are now eligible, you should still keep receipts for substantiation if the IRS audits your HSA.
Does the CARES Act apply to FSAs too?
Yes. The OTC and menstrual product changes apply to FSAs, HRAs, and HSAs equally.
Related Terms
Qualified Medical Expense
Healthcare costs that can be paid or reimbursed tax-free from your HSA, as defined by the IRS.
Eligible Expense
A healthcare cost that qualifies for HSA payment or reimbursement. Same as qualified medical expense.
Health Savings Account (HSA)
A tax-advantaged savings account for people with high-deductible health plans to pay for qualified medical expenses.
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