Yesterday Congress passed an additional Stimulus Package that included some changes pertaining to Flexible Spending Accounts (FSA) and Dependent Care Accounts (DCA). As of right now the President has not signed it into law, but we do expect that to happen at some point.
The following was included:
- Permitting FSAs and DCAs to carry over all unused amounts from 2020 to 2021 and from 2021 to 2022.
- Permitting a 12-month grace period for unused benefits or contributions in health and dependent care FSAs for plan years ending in 2020 or 2021.
- Permitting FSA participants who terminated either during the 2020 or 2021 plan year to spend down their unused balances for expenses incurred through the end of the plan year in which the termination occurred.
- An extension of the maximum age of eligible dependents from age 12 to age 13 for dependent care FSAs for the 2020 plan year and for unused amounts from the 2020 plan year carried over into the 2021 plan year.
- Permitting a prospective change in election amounts for health and dependent care FSAs for plan years ending in 2021 without a corresponding change in status event.
Please note that these changes are not mandatory. They simply give employers permission to make these changes if they decide to do so. If you do decide to implement one or more of them, the plan must be amended no later than the last day of the first calendar year beginning after the end of the plan year in which the amendment is effective. For example, if you implement changes for 2021, the plan must be amended by December 31, 2022. TPAs are currently working to communicate instructions for next steps.