Options Include an Extended Period for Incurring Expenses and Increased Health FSA Carryover Limit
Flexible spending accounts are about to get more flexible for people who have seen their household budgets upended by the Coronavirus pandemic.
Account holders will be able to make mid-year changes on their contribution amounts — either increasing or decreasing the amount — and they’ll also be able to carry over slightly more money into next year, the Internal Revenue Service announced.
The agency also said workers will be allowed to enroll in their employer’s health plan outside of the typical open enrollment season. This change enables workers to quickly get themselves and their family on their company’s plan if they’ve previously been covered by a spouse who’s lost their job.
On May 12, 2020, the IRS announced more options with respect to unused amounts in health flexible spending accounts (FSAs) and dependent care assistance programs (DCAPs). These options allow employers to permit:
- An extended period for incurring health FSA or DCAP expenses; and
- Health FSA carryovers of up to $550.
Due to the COVID-19 outbreak, employees may be more likely to have unused amounts in their health FSAs or DCAPs. IRS Notice 2020-29 allows employers to permit employees to apply unused amounts remaining in a health FSA or a DCAP at the end of a plan year ending in 2020 (or a grace period ending in 2020) to pay or reimburse expenses incurred through Dec. 31, 2020.
IRS Notice 2020-33 increases the health FSA carryover limit for unused funds remaining at the end of a plan year from $500 to $550 to reflect indexing for inflation. This change is effective for plan years beginning in 2020 (and reflects the maximum amount that may be carried over to the immediately following plan year beginning in 2021).
Recent Posts
The U.S. Department of Labor Announces Proposed Rule To Protect Indoor, Outdoor Workers From Extreme Heat
The U.S. Department of Labor has proposed a new rule aimed at protecting workers from extreme heat hazards. This initiative seeks to safeguard approximately 36 [...]
Supreme Court Overturns Chevron Deference: What It Means for Workplace Safety and Regulation
The landscape of federal regulation is set for a seismic shift following a recent Supreme Court decision. On June 28, in Loper Bright Enterprises, et [...]
Navigating the Compliance Maze: How NARFA Simplifies Employee Benefits for Automotive and Trade Industries
In today's complex regulatory environment, businesses in the automotive, roads, fuel, and related industries face unprecedented challenges in managing employee benefits. Recent studies show that [...]