As part of the COVID relief package passed by Congress, NAIFA-backed Flexible Spending Account (FSA) relief was included to relieve some of the financial burden consumers face regarding healthcare costs and health spending account allocations. Known as the Consolidated Appropriations Act, 2021, (CAA) it includes provisions extending FSA benefits to those enrolled in such plans.
Under the CAA, employers sponsoring flexible spending account programs may elect to adopt some or all the following changes:
- Health FSAs and dependent care FSAs may allow any remaining balances at the end of plan years ending in 2020 and 2021 to roll into the following plan year.
- Health FSAs and dependent care FSAs may extend grace periods for plan years ending in 2020 and 2021 to up to 12 months.
- Health FSAs may allow employees who terminate participation during 2020 or 2021 to spend down unspent balances through the end of the plan year (similar to what is already permitted for dependent care FSAs).
- Dependent care FSAs may extend the age limit for qualifying children from 13 to 14 for a plan year for which open enrollment ended before January 31, 2020, and for any unspent funds from that plan year that are available (either by rollover or grace period) to the employee during the following plan year.
- Health FSAs and dependent care FSAs may allow prospective election changes during 2021 without regard to any change of status requirements.
Employers electing to adopt any or all these changes may implement them immediately and then amend their plan documents in the following calendar year.