Important FSA News: Coronavirus Relief Bill Signed Into Law Creates New Options for FSA Plans

A new Coronavirus relief bill was passed by Congress on December 21, 2020 and signed into law by President Trump on December 27, 2020.
We want to ensure our clients and valued broker partners are informed of the changes, their impacts, and the actions Flores is taking to provide a remarkable benefits experience.

What you need to know:

• On December 27, 2020, President Trump signed the Coronavirus Relief Bill into law.
• Included in this expansive legislation were several optional provisions Flexible Spending Account (FSA) plan sponsors may choose to adopt, including expanded carryover and grace period options, as well as new leniency around status changes and reimbursements.
• Plan sponsors must amend their plans to adopt any optional provision. Employers who wish to make any of the proposed optional changes must do so by the end of the calendar year following the plan year they wish to amend. For example, employers would have to amend changes to the plan year ending in 2020 by the deadline of Dec. 31, 2021.
• FSA plans for employers who do not take action to adopt any of the new plan provisions will operate in accordance with their current plan parameters, as outlined in their plan documents.

Charlotte, NC – December 29, 2020 – A new Coronavirus relief bill was signed by President Trump on December 27, 2020. Included in this expansive legislation were several optional provisions related to Health Care Flexible Spending Accounts (HCFSAs) and Dependent Care Flexible Spending Accounts (DCFSAs) employers may choose to adopt.

Similar to amendments made earlier in 2020, the new legislation gives employers the option to:

• Amend their HCFSA and DCFSA plans to allow for a carryover of any unused funds from 2020 to 2021 and from 2021 to 2022.
• Expand grace periods for HCFSAs and DCFSAs for plan years ending in 2020 or 2021 to 12 months after the end of each respective plan year, as opposed to the two month and fifteen-day period currently allowed.
• Permit HCFSAs and DCFSAs to reimburse individuals who are no longer active participants in the plan (i.e., allow for reimbursement of services rendered after a benefit end date).
• Raise the age of an eligible child for purposes of the 2020 DCFSA plan year to 13 years of age, up from 12 years of age.
• Amend HCFSA and DCFSA plans to permit a prospective change in election amounts for plan year ending in 2021, without a corresponding change in status event (similar to Notice 2020-29 passed in May 2020).

Employers who wish to adopt any of the optional changes must inform their employees of the decision and amend their plan by the end of the calendar year following the plan year they wish to amend.

We will continue to research these changes and monitor for any new information released to ensure you stay up to date. Thank you for your partnership.