As we monitor the spread of COVID-19, we want to assure you that we will continue to deliver the excellent service you expect from us. Here is the latest update from our team.
Consolidated Appropriations Act, 2021
On Sunday, December 27, President Trump signed a COVID-19 relief and government spending package called the Consolidated Appropriations Act, 2021. As part of the relief bill, the government has expanded upon earlier-provided relief for flexible spending accounts (FSA) and dependent care flexible spending accounts (DCA).
Employers may choose to adopt any or all of the following provisions; however they are not mandatory.
- Rollovers – Allow employees to carry over all unused amounts in a FSA and/or DCA from the 2020 or 2021 plan year to the next plan year.
- Grace Periods – Extend the FSA grace period from 2 1/2 months to 12 months following the end of the plan years for those plan years that end in 2020 or 2021.
- Qualifying Dependent Age – Allow reimbursement for expenses incurred for a child through the plan year where the child attains age 14 (this helps address a situation where a child attained age 13 during the pandemic, therefore, the parent may not have been able to use the funds because school or daycare was closed).
- Election Changes – Permit prospective mid-year election changes without regard to a change in status in order to accommodate these updates.
- Reimbursements Post-Termination – Allow reimbursements through the end of 2020 or 2021 plan year in which participation ends, including any grace period or extended grace period even if those reimbursements were incurred after the employee was employed with the employer.
Deadline for Making Plan Amendments
Employers wanting to adopt one or more of the above provisions must amend their applicable plan documents by the last day of the first calendar year beginning after the end of the plan year in which the amendment is effective. This means changes for the 2020 plan year need to be adopted by December 31, 2021, and changes for the 2021 plan year need to be adopted by December 31, 2022.