Do You Have The Healthcare or Dependent Care Flexible Spending Account Blues?
Due to the pandemic, many elective surgeries were postponed or many people just generally postponed their normal doctor and dental visits. In addition, many daycare centers were closed and some of us were working at home and caring for children. The bottom line is many workers found themselves with excess funds in their flexible spending accounts (FSAs) going in 2021. In the past, the employer’s hands were tied and if funds were not used by year-end, those funds were forfeited by the employee.
There are temporary rules for 2021 and 2022 that may provide relief for some of you. For those employers who are willing to amend their plans, there is now flexibility. The law allows employers to make the following changes:
- Allow employees to carry over unused money up to the full annual amount from the year 2020 to 2021 and also from the plan year 2021 to 2022 for healthcare and dependent care FSAs
- Allow up to a 12-month grace period for employees to incur new expenses and submit claims against accumulated funds for plan years ending in 2020 or 2021 for healthcare and dependent care FSAs
- Allow midterm election changes on a prospective basis without a change in the status event for plan years ending in 2021 for healthcare and dependent care FSAs
- Allow dependent care reimbursement up to age 14 in cases where an employee’s dependent turned 13 in 2020 and the employee had leftover funds from 2020 for dependent care FSAs
If you or have questions regarding any of these changes, please reach out to a Kimble team member.