Congress recently passed the Coronavirus Aid, Relief, and Economic Security Act, which contained some important provisions that affect Health Savings Accounts (HSA), Flexible Spending Accounts (FSA), and 401(k). Some details:
- Over-the-counter medications can be paid for or reimbursed through an FSA, HSA, or Health Reimbursement Account (HRA) without a doctor’s prescription. This allows you to use pre-tax dollars for items like ibuprofen, allergy and cold medication, etc., without needing a doctor’s prescription.
- Menstrual care products are now considered a qualified medical expense and are eligible for payment or reimbursement through an FSA or HSA. All expenses incurred after December 31, 2019, qualify, and the provision has no expiration date.
These provisions may make it easier to access your 401(k) plan before your expected retirement age—with fewer penalties and more flexible payback options:
- Qualified 401(k) plan participants can take a coronavirus-related distribution from their retirement plan account up to $100,000.
- Qualifying 401(k) plan participants can borrow a higher amount than what’s normally allowed.
- Generally, participants can be allowed to delay repayment of 401(k) loans by up to one year.