COVID-19 has affected small businesses and their employees across the world. To provide economic support during these difficult times, Congress passed stimulus packages in March: first the Families First Coronavirus Response Act (FFCRA), then the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). These packages include several provisions aimed to help employees get access to cash, sick leave, and COVID-19 testing assistance.
Emergency paid leave
You may be able to take up to 10 workdays off and still get paid if you are unable to work as a result of COVID-19 precautions, because you are sick with COVID-19, or because your childcare or school facility has closed, as part of the Families First Coronavirus Response Act (FFCRA). Full-time and part-time employees are both eligible. If you are a full-time employee, you can take 80 hours. If you work part-time, your leave depends on the average number of hours worked in a two-week period.
Penalty-free 401(k) withdrawal
Through December 31, 2020, if you are affected by COVID-19, you can make early withdrawals of up to $100,000 from your 401(k) without incurring a penalty. Previously, if you withdraw from retirement accounts before the age of 59½, you would have to pay a 10% penalty on any amount you take out. In order to qualify, you must meet certain conditions, and if you choose to withdraw early from your 401(k), there are some tax implications to be aware of.
COVID-19 testing and preventative care
If you are covered by an individual or group health insurance plan, you should be able to get tested for or get preventative care related to COVID-19 without having to pay out of pocket. Check with your insurance carrier to confirm what’s covered from their COVID-19 bulletin online or by calling them directly.
Eligible coronavirus tests (covered by FFCRA) are any tests approved by the Food and Drug Administration (FDA), developed by states, requested by the developers for authorization from the FDA, or deemed appropriate for COVID-19 diagnosis by the secretary of Health and Human Services (HHS).
Resources for the unemployed and underemployed
You’ve probably heard a lot about new unemployment benefit programs. In response to COVID-19, Congress has made more people eligible for more money than before. If you choose to apply for unemployment benefits, you’ll apply through your state—no matter which programs you’re eligible for. We’ve documented each state’s process to save you time.
Expanded tax-advantaged spending
The CARES Act eliminates red tape for employers and individuals by expanding the use of tax-favored health care accounts, like HSAs and Flexible Spending Accounts (FSAs), to allow for the purchase of essential supplies and services, tax-free.
You can now use your HSA or Health FSA to purchase select approved over-the-counter (OTC) drugs without a prescription, as well as menstrual care products.
This new policy applies to eligible purchases made after December 31, 2019. Some retailers may still be in the process of updating their systems to allow the use of debit cards for these purchases, so you may need to pay out of pocket then file a claim for reimbursement. Be sure to visit FSAstore.com to understand which OTC drugs are approved for reimbursement prior to making a purchase.
Other ways to save
If you’re working from home and no longer driving or taking public transit to work, you can reduce your commuter benefit election.
If you’re using funds from a Dependent Care FSA to pay for childcare and your situation has changed, this may be a qualifying event that allows you to reduce your DCFSA election.
Contact your benefits administrator for more information on these options.