Juggling the legislation and ever-changing provisions regarding COVID-era benefits has been a monumental task for benefits professionals in 2020.
In the latest round of COVID relief, Congress has addressed one of the key issues we’ve been tracking for consumer-directed health care benefits in the Consolidated Appropriations Act and granted a much-needed reprieve to employees with these accounts…if employers take action.
Where We’ve Been This Year
Many employees were facing a surplus in their health care flexible spending accounts (HCFSAs) and dependent care flexible spending accounts (DCFSAs) in 2020 due to deferred care or provider shut downs, despite some of the allowances to make mid-year plan modifications from Notice 2020-29 as well as an increase in the allowed carry over amount to $550 for health care FSAs in Notice 2020-33.
However, beyond being able to stop contributions, many DCFSA holders found themselves with a lot of funds and no providers. These employees looked to be among the hardest hit, as day cares and summer camps closed or cancelled activities early in the year, and many employees were faced with no recourse to recover contributed funds without an extension or carry over provision.
Extensions and Provisions
Employers now have several options to help current HCFSA and DCFSA members and offer a “late” enrollment period to those who would still like to opt in with the 2021-2022 provisions. Here is an overview of the consumer accounts provisions that employers may incorporate into their plan design for 2021-2022:
Next Steps for Employers
For impacted employers who offer health care FSAs and dependent care FSAs, contact your benefits counsel and your consumer accounts administrator to determine how to amend your plan to accommodate these provisions. These provisions are not automatic and require proactive enablement on the part of the employer. Additionally, benefits teams should consider communicating the extensions or enrollment modification options with your population.
There are several other benefits-related items within the bill that we will cover in our upcoming special edition compliance webinar on January 7, 2021. To attend our free webinar, register here.
The Consolidated Appropriations Act of 2021 can be found here. FSA relief information begins on page 2484 of the bill (also page 4951 of the PDF document) in Section 214.