Yesterday evening, President Trump signed the COVID-19 relief bill into law, extending billions of dollars in coronavirus aid and averting a government shutdown that was set to begin on Tuesday. One of the many provisions in the law now provides employers an opportunity to allow those who have flexible spending accounts (FSAs) to roll over remaining dollars in their accounts from 2020 to 2021 and from 2021 to 2022. These changes are especially beneficial in a year as unpredictable as 2020.
As a result of the COVID-19 pandemic, many employees who funded FSAs in 2020 may have used only some of the money or none at all. To address these issues, the COVID-19 relief package now includes a number of “temporary” special rules for health and dependent care FSAs. The headlines of what is included are below:
These changes are optional for employers. If employers adopt them, plan amendments must be made, but employers have time to do so. Plan amendments must be made by the end of the first calendar year beginning after the end of the plan year in which the amendment is effective, provided the plan must be operated consistent with the terms of the amendment beginning on its effective date (e.g., for calendar year 2020 plan year, plan amendments must be adopted by December 31, 2021; for July 1, 2020 to June 30, 2021 plan year, plan amendments must be adopted by December 31, 2022).
Conner Strong & Buckelew is prepared to assist plan sponsors in determining how plans may be configured to enable the above described FSA changes should employers choose to implement them. We will also provide a more detailed update on these and other benefits related provisions included in the new law.