What Newly Eligible OTC Items Mean for CDH Administrators

The $2 trillion coronavirus relief bill signed into law this past weekend includes a provision that makes over-the-counter (OTC) medicines and menstrual products HSA-, FSA- and HRA-eligible. We’re here to keep CDH administrators informed about what this means for them, their employer groups and their members.

When can consumers begin to purchase these products with their benefits cards?

On April 15, the Special Interest Group for IIAS Standards (SIGIS) updated its Eligible Product List (EPL) to include OTC items and menstrual care products. Merchants can now update their systems to include the new standards, but adoption dates will vary, as some merchants update their inventory monthly, quarterly or annually. Once a merchant adopts the new standards, consumers can purchase OTC items and menstrual care products through them with a card swipe.

Can consumers seek reimbursement for these products in the meantime?

Yes. If consumers attempt to purchase these items before systems have been updated and the transaction is denied, they can submit a claim for reimbursement. In addition, this provision is effective for any qualified purchases made after December 31, 2019. Consumers can, therefore, submit claims for reimbursement for purchases made between that date and when this law passed.

What new products does this provision include?

We estimate that approximately 17,500 new OTC products will become eligible with this change. These include OTC items that were removed from eligibility with the passage of the Affordable Care Act (ACA), as well as items that have been submitted for or rejected from eligibility since. Because menstrual care products have never been eligible with tax-advantaged accounts, we don’t have a firm estimate on the number of those items currently. We will update you when we have a better idea around May 15.

How can I prepare my business for these changes?

You can take several actions right now and as these items become officially eligible to make sure your organization is up to speed and ready to assist consumers.

  1. Prepare frontline staff. Make sure your call-center staff and account management teams are aware of these changes and know how to answer any questions that may arise related to them. The answers above can serve as guidance.
  2. Communicate the change to groups and members. Send out a communication to employers and members making them aware of these changes, as employers will want members to start using their cards to buy OTC and menstrual items as soon as possible. We’re all experiencing a surplus of communications in the wake of COVID-19, so it may make sense to include this as part of a broader COVID-19 update to avoid email fatigue.
  3. Modify claims processing to include OTC items. Ensure appropriate codes are included in the plan setups within your administration platform and establish a clear policy for acceptable documentation for manual claims. In addition, you’ll need to train claim processors on the new eligible OTC items so they can efficiently process manual claims.
  4. Update informational materials. With this change, OTC items no longer require a prescription. Make sure to eliminate any language that references the prescription requirement.
  5. Stay informed. We will continue to update you on developments related to these changes. You can also visit FSAStore.com for additional information.

 

 

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