NEWS FLASH – President Signs Temporary Changes to FSA/DCA Rules

On December 27, 2020, President Trump signed the latest COVID-19 relief and government spending bill (Consolidated Appropriations Act, 2021) that expanded upon earlier Flexible Spending Account (FSA) and Dependent Care Account (DCA) CARES Act relief provisions.

Employers MAY choose to adopt any or all of the following provisions (although they are not mandatory) through plan amendments.

  • Rollovers – Allow employees to carry over all unused amounts in a FSA and/or DCA from the plan year ending in 2020 or 2021 to the following plan year; or
  • Grace Period – Extend the grace period to 12 months for those plan years that end in 2020 or 2021. Similar to current law, employers can choose between rollover or grace period extension.
  • Mid Year Election Changes – Allow employees to make mid-year FSA/DCA election changes without regard to a change in status.
  • DCA Dependent Child Max Age – Allows reimbursement for expenses incurred for a child through the plan year where the child attains age 14 (this helps address a situation where the child attains age 13 during the pandemic, therefore, the parent may not have been able to use the funds because school or daycare was closed).

Additional plan amendment information will be provided by your FSA/DCA administration provider. Amendments of the above provisions for the plan year ending in 2020 must be adopted by 12/31/2021 (and by 12/31/2022 for amendments for the plan year ending in 2021). Please contact your Benefits Advisor if you have immediate questions.