This Information Benefits Millions of Americans
HSA funds can now be used for over-the-counter products. That includes medical supplies and feminine products. This is a practical change by our federal elected legislature that will benefit millions of Americans. An FSA is what’s referred to as a Flexible Spending Account. And an HSA is a Health Savings Account. This is an opportunity for tax professionals to show their clients how to save money. A dollar saved is almost as good as a dollar earned!
Save on Over-the-Counter Products
Thanks to the Coronavirus Aid, Relief and Economic Security (CARES) Act, folks can use FSA or HSA funds to buy over-the-counter medications that do not require a prescription. You can purchase pain relievers, heartburn medications, allergy relief and more, for the first time since 2011 using your FSA or HSA account. You can also use your funds for feminine care products, including tampons, pads, liners, cups, sponges, etc., for the first time. These accounts are expending un-taxed funds. In addition, the account earnings are tax free as well!
Here is a list of the eligible over-the-counter products, or eligible expenses.
Retroactively Effective January 1, 2020
These changes to eligible expenses are effective retroactively to January 1, 2020. Contact your benefits department to see if you can get reimbursed now if you purchased OTC medicines or feminine care products this year. Remember, these accounts have limitations on how much can be contributed. So, you definitely want to make the most of these tools.
The Cares Act Only Added Benefits
This change was only an addition to the law. Holders of FSA or HSA accounts can still use the funds for prescriptions, contact lenses and medical bills including co-insurance, co-payments and deductibles the same as previously. Businesses like CVS typically note when a product is FSA or HSA-eligible. Apparently, Amazon already also has an FSA section. This is all valuable information to share with your clients. It’s always beneficial to remind clients why your services are valuable.
HSA Funds Rollover but FSA Funds Expire
You can rollover Health Savings Account funds from year to year. However, FSA’s do not afford you that same courtesy. You need to use your Flexible Spending Account funds within the calendar year to avoid losing them.
Keep Your Receipts
Be sure to counsel your clients to keep their receipts when using either of these accounts. Audits are always possible, so it’s important to be prepared to justify all eligible expenses. Do you need to complete your CTEC Annual 20-Hour Update? Or would you like to expand your tax knowledge?
The nice folks at Pronto Tax School can help you to begin a new tax career or grow as a professional. What’s more is they have outlined what to do every step of the way. Just follow The Pronto Path.
