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April 1, 2020
The CARES Act Expands Retirement and Health Plan Benefits for COVID-19

On March 27, 2020, Congress passed the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The CARES Act contains several provisions designed to give individuals affected by COVID-19 greater access to their retirement plan funds and expand health plan coverage and benefits, supplementing changes made by the recent Families First Coronavirus Response Act (the “FFCRA”).  Please note that these changes have varying effective times, and some will only apply during 2020.  However, some changes may be extended if the emergency persists.


Plans may be amended by December 31, 2022 to reflect the following changes available for 2020:

  • New Withdrawal Option: Retirement plans sponsored by employers and IRAs can now allow distributions to “qualified individuals” of up to $100,000 during 2020, free of the 10% penalty tax that would otherwise apply if made prior to age 59 ½.  A qualified individual is someone diagnosed with COVID-19, whose spouse or dependent is diagnosed with COVID-19, or who experiences adverse financial consequences related to COVID-19 as a result of being quarantined, furloughed, laid off, having hours reduced, or being unable to work due to lack of child care. The income tax on distributions will be payable over three years, unless the distribution is repaid during the following three years, in which case the income tax will be avoided.
  • Relaxation of Plan Loan Rules: For the six months following enactment (i.e., until September 23, 2020), the amount qualified individuals, as defined above, can borrow from their retirement plan accounts has been increased to the lesser of $100,000, or 100% of their vested account balance.  This essentially doubles the maximum permitted loan.  In addition, loan payments otherwise due from a qualified individual between March 27, 2020 and December 31, 2020 can be delayed for one year.
  • Waiver of Required Minimum Distributions: Required minimum distributions otherwise due from retirement plans in 2020 have been suspended for all participants, not just those affected by COVID-19.  This allows plan participants to avoid having to sell plan investments to fund RMDs after the steep decline in the stock market and is similar to the relief granted during the financial crisis in 2009. 
  • Funding Relief for Defined Benefit Plans: Employer defined benefit plan minimum contributions for 2020 have been delayed until January 1, 2021.


  • Elimination of Cost Sharing for COVID 19 Services: Building on the FFCRA which required health plans to cover FDA-approved testing needed to detect or diagnose COVID-19 without cost sharing, the CARES Act expands coverage to include services or items provided during a medical visit (including telehealth visits) that result in COVID-19 testing and screening.  It also broadens the type of tests covered beyond those approved by the FDA to include: i) tests provided by labs on an emergency basis; ii) state-developed tests; and ii) other tests determined appropriate by the Department of Health and Human Services.  Additionally, approved vaccines and other preventive services will be covered by health plans and insurance companies without any cost sharing when they become available.  These coverages will continue while there is a declared public health emergency.
  • Exemption for Telemedicine under High Deductible Health Plans: During 2020 and 2021, high-deductible health plans may cover telemedicine and other remote services before the deductible is met without disqualifying a participant from receiving or making contributions to their HSA.
  • Expanded Coverage for Over-the-Counter Medicines: Effective January 1, 2020, health savings accounts, flexible spending accounts, and health reimbursement accounts may provide reimbursement for over-the-counter medical products and drugs without a prescription.  These changes are permanent and do not expire in 2020.


  • Repayment of Student Loans: For 2020, the benefits an employer can provide under an educational assistance plan have been expanded to include repayment of an employee’s student loans, subject to the current annual limit of $5,250 per employee on educational assistance plans.
  • ERISA Filing Deadlines:  The Department of Labor has been granted the authority to delay ERISA filing deadlines for up to one year in the case of a public health emergency.  It is anticipated the DOL will use this authority to delay Form 5500 filing deadlines.

Please contact Elizabeth Davydov ( or Charles Berquist ( if you have questions about these or any other benefits questions.

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