COVID-19 Updates and FAQs

Many of the links below are provided by our software partner Alegeus.

Tax credits for required paid leave - the required sick leave for employees is reimbursable to employers through tax credits. See the blog and the IRS site for how FSAs, HRAs, and HSAs may impact the credit.

FAQs about compliance related to FSA, HRA, and HSA accounts as well as COBRA. Two of the most common questions we have heard are listed below:

• If employees are on furlough or temporary leave what happens to the accounts and how does COBRA apply? This depends on if the absence is covered under FMLA or non-FMLA. Under FMLA, benefits must be offered during the absence. Employers can collect premiums for benefits by prepayment, on an ongoing basis, or upon return to work. Some employers may maintain benefits for non-FMLA leave under the same conditions as FMLA (see above).

  Some employers might cover the employee’s cost share while on FMLA or non-FMLA leave - for example cover the employee portion of the Health FSA while away so that the FSA can be accessed during the leave. Employers should treat employees equally and specify the policy in writing.

  COBRA applies if a person loses coverage due to reduced hours or termination.

• Can employees change Dependent Care FSA (DFSA)? The rules for changing DFSA elections are flexible. Examples of situations that allow a change or drop of coverage include change of provider, dropping a provider due to closure, dropping the service due to the child being cared for at home, and initiating coverage.

The Coronavirus Aid, Relief and Economic Security (CARES) Act was signed March 27, 2020 and includes the following changes to tax favored accounts effective January 1, 2020:

• FSAs, HRAs, and HSAs can reimburse or pay for Over-the-Counter (OTC) purchases of drugs and medicines without a prescription. Note - merchants should be updating their card systems beginning April 15 to allow cards to be used for these items. Each merchant updates their eligibility list monthly, quarterly or yearly so card acceptance will depend on the merchant. Participants can file manual claims in the meantime.

• Menstrual products were added to the list of qualified medical expenses covered by FSAs, HRAs, and HSAs. Note - merchants should be updating their card systems beginning May 15 to allow the card to be used for these items. Each merchant updates their eligibility list monthly, quarterly or yearly so card acceptance will depend on the merchant. Participants can file manual claims in the meantime.

• Telehealth services below the deductible will be allowed in HSA-compatible health plans through December 31, 2021.

Due to the federal tax filing and payment deadline extension to July 15, 2020, contributions to Health Savings Accounts (HSAs) are allowed for the 2019 tax year until July 15, 2020.

Families First Coronavirus Response Act - effective no later than April 2, 2020 provides paid sick leave to employees affected by COVID-19. See Department of Labor page for more info.

Check out the FSA Tools and the Account Tutorials under the Resources menu

We have updated the Resources menu to include FSA Tools and Account Tutorials - check out the videos, calculators, quizzes and more and learn about Health FSA, Dependent Care FSA, HRA, HSA and other accounts. 

Have you received a 226-J letter from the IRS?

These letters are sent to employers who owe a proposed Employer Shared Responsibility Payment (ESRP) based upon their ACA reporting 1094-C and 1095-C forms for previous years.

Free Consultations on 226-J Letters

ACAPrime is offering Free Consultations for each client who has received a 226-J letter regardless of whether they used ACAPrime or not in the past.

See our ACA services for more details.

Selected Flexible Benefits and COBRA regulations including changes under PPACA

We are asked about how regulations affect the services we offer and about how PPACA (Healthcare Reform) has impacted our offerings.  Below are some highlights.

-       Health FSA – maximum $2,550 (2015) indexed per year

-       Health FSA – W-2 may need to include Health FSA if employer amount exceeds employee amount

 -      Health FSA/HRA – no OTC medicines without Rx

-       Health FSA with employer credits - the maximum employer credit allowed is greater of 100% employer match of employee deductions or a $500 employer credit

-       Health FSA - employees in Health FSA must be eligible to enroll in employer major medical group plan. If no major medical group plan is offered then employer may not sponsor a Health FSA.

-       HRA - employers must offer separate major medical group plan and HRA enrollment can only be for employees who also enroll in the separate major medical group plan. Applies to employers of all sizes.

-       HRA - As of January 1, 2012 plan years, employers must report to Centers for Medicare & Medicaid Services (CMS) any employee, spouse, or dependent who is covered by both Medicare and the HRA if the HRA amount is $5,000 or more (including rollovers).

-       HRA – PCORI yearly fees due July 31.  $2.08 per employee current rate.

-       Individually Owned Premium Reimbursement - if the policy is owned by the individual and is not a group policy, the HRA or IOP can only reimburse dental, vision, and specified disease premiums. An HRA or IOP can no longer reimburse individual major medical premiums as pre-tax.

-       Plan documents – written plan document required for any pre-tax plans (Health FSA, POP, HRA, etc.)

-       Form 5500 – required for group health plans with one hundred or more employees participating as of first day of plan year.  Required per plan unless plans are under a Wrap plan.

-       Discrimination testing – required for Section 125, HRAs, and self-insured plans.  Awaiting guidance on insured plans.

-       1094-B, 1095-B, 1094-C, 1095-C – employers with 50 or more FTE in 2015 - IRS forms due January 2016 to EEs and March 2016 to IRS. Determines employer shared responsibility and individual mandate penalty and individual tax credit.

-       Cadillac tax – 2018??? – to include FSA or HRA reimbursements and ER contributions to HSA

-       COBRA – Why take COBRA after PPACA?  Chosen by those who have already met deductible, provider not in other plan, or choose dental or vision

-       COBRA - HIPAA certificates no longer applicable