With the recent release of IRS Notice 2020-18 and the passage of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, we wanted to update you with the changes that will impact your benefit account(s).
IRS tax extension
Due to the recent extension of the tax filing deadline, the IRS has released additional guidance regarding the due date of 2019 health savings account (HSA) contributions. The deadline for 2019 HSA contributions has now been extended to July 15, 2020. Learn more about the move by reading the IRS publication 2020-18 and the IRS Q&A about the update.
The CARES Act
The much-anticipated CARES Act has been passed by both houses of the United States Congress and was signed into law by President Trump on March 27, 2020. The CARES Act states that consumers can purchase over-the-counter (OTC) drugs and medicines with funds from their health savings account (HSA) or flexible spending account (FSA). Consumers may also receive reimbursement for OTC purchases through those accounts. In addition, menstrual products are now consider a qualified medical expense, meaning consumers may pay for or be reimbursed for these products through their HSA or FSA. This provision is effective for purchases made after December 31, 2019, and for reimbursements of expenses incurred after December 31, 2019.
Please note: At this time, you cannot yet purchase OTC or menstrual care items using your benefits card. It will likely take several weeks/months for merchants to update their systems with the new eligible products list. If you try to purchase these items with your benefits card before systems have been updated and the transaction is denied, you can submit a claim for reimbursement. Just be sure to save your receipt.
IRS Tax Form 5498-SA
Due to the extension of the tax filing deadline to July 15, 2020, 5498-SA tax forms will not be sent out until August 2020. The 5498-SA is used to report any contribution made to your HSA prior to the tax deadline for the 2019 tax year. Form 5498-SA will also report rollovers and fair market value for your HSA. For tax filing purposes, if you need your 2019 HSA contribution total and aren’t planning to make any prior-year contributions, you can access this information online: Under Benefit Account Summary on your HSA, select View Details and look for Prior Year Deposits.
If you have questions or aren’t sure about the effects of these changes on your accounts, we’re here to help! Just reach out to your Health Benefit Solutions contact to get started.
Learning Center articles, guides, blogs, podcasts, and videos are for informational purposes only and are not an advertisement for a product or service. The accuracy and completeness is not guaranteed and does not constitute legal or tax advice. Please consult with your own tax, legal, and financial advisors.