Due to the COVID-19 Pandemic, IRS Notice 2020-291 permits increased flexibility for mid-year elections for Health Care Flexible Spending Accounts (HCFSA), Limited Expense Health Care Flexible Spending Account (LEX HCFSA), and Dependent Care Flexible Spending Accounts (DCFSA).
Effective July 1, 2020, current enrollees in the Flexible Spending Accounts Program (FSAFEDS) have a 60-day limited period during which they can make certain mid-year changes to their existing elections. The limited period ends 60 days from July 1, 2020.
During the 60-day limited period, enrollees who have a 2020 HCFSA, LEX HCFSA, or DCFSA can make a one-time change (increase or decrease) in the amount of their annual election in each Flexible Spending Account (FSA) in which they are enrolled.
Important Highlights:
- Enrollees cannot receive a refund of allotments they have already made to their FSA. Additionally, enrollees cannot decrease their election below the amount already made or the amount already reimbursed for eligible expenses.
- Changes will be effective the next pay period after approval by FSAFEDS and prorated over the remaining pay periods. Therefore, the new allotment amount each pay period will depend on the number of remaining pay periods at the time the change becomes effective.
- The carryover amount for the HCFSA and LEX HCFSA has increased from $500 to $550. Enrollees may now carryover up to $550 of unused funds from 2020 into 2021, if they re-enroll for the 2021 plan year. This increased carryover amount of $550 will continue in place for plan years beyond 2021.
- Enrollees who had a DCFSA for the plan year ending December 31, 2019 had until March 15, 2020 (the “grace period”) to incur eligible DCFSA expenses. Claims for reimbursement of those expenses were due by April 30, 2020. Any funds not used during the grace period are normally forfeited. An extension of this period is being allowed this year on a one-time basis. Specifically, enrollees who had a DCFSA in the plan year ending December 31, 2019, will now be allowed to both incur eligible expenses and claim any 2019 funds remaining in their DCFSA account until December 31, 2020. The extended claim period is automatic for qualified enrollees.
- This 60-day limited period to increase or decrease the FSAFEDS election should not be confused with the existing opportunity to increase or decrease DCFSA or HCFSA elections through September 30 based on a Qualifying Life Event (QLE). This 60-day limited period does not require the enrollee to establish a QLE and does not prevent an enrollee from submitting a QLE change before or after submitting a change during this 60-day limited period, provided the QLE is submitted no later than September 30, 2020.
To make a change to your existing FSA, or if you have questions, contact FSAFEDS by calling 877-372-3337 or by visiting www.FSAFEDS.com.