To assist with the nation’s response to the COVID-19 pandemic, new provisions were released on Tuesday, May 12, 2020, by the IRS to allow Cafeteria Plan participants to change, revoke, or enroll in their employer’s Group Health Insurance, health Flexible Spending Account (FSA), and/or daycare reimbursement accounts mid-year 2020.
In addition, Flex Plans that allow for a $500 carryover amount of unused funds of the FSA account at year-end can now amend their plans to allow up to $550to be carried over to the immediately following plan year (2021).
In Notice 2020-29, the IRS is offering extra flexibility to taxpayers by:
- Expanding the ability of taxpayers to make mid-year elections changes, including increasing or decreasing existing elections, revoking, or newly enrolling in health coverage, health FSAs, and dependent care assistance programs
- Applying earlier relief for high-deductible health plans to cover expenses related to COVID-19, and a temporary exemption for telehealth services retroactively to Jan. 1, 2020.
In conjunction with that notice, the IRS also issued Notice 2020-33, which directs the Treasury secretary to “issue guidance to increase the amount of funds that can carry over without penalty at the end of the year for flexible spending arrangements.” The notice ups the limit for unused health FSA carryover amounts from $500, to a maximum of $550 to the immediate plan year (2021).
Please contact one of our Employee Benefits Administrators if you would like to amend your Plan(s) to allow for these new provisions.
