New Allowances for FSA/DCA Signed Into Law – COVID Update

Posted on December 30, 2020

Optional FSA and DCA Allowances in new COVID Stimulus Package 

A new stimulus package has been passed by Congress and signed into law by the President that provides a number of Health FSA (FSA) and Dependent Care Account (DCA) related provisions including new rollover rules. These new rules are optional to the Employer, but Employers must opt-in to these changes for them to take effect. The deadline for the amendment to the plan document is 12/31/2021 for 2020 plans however each Administrator may require earlier notification. Contact your PGP Representative for confirmation. 

Below outlines all of the new provisions. 

Dependent Care Flexible Spending Arrangement (DCFSA)

  • Any unused funds from 2020 Plan year may be rolled into 2021 plan year. Additionally, 2021 plan year funds may be rolled into 2022.
  • Dependents who reached the age of 13 during pandemic qualify as eligible dependents. Employees may receive reimbursement for their 13-year-old eligible dependents, as long as they were enrolled on or before 1/1/2020.Employers Must opt-in to these changes for them to take effect
  • Mid-Year election changes allowed for plan years ending in 2021

Health Flexible Spending Arrangement (Health FSA)

  • Any unused funds from 2020 Plan year may be rolled into 2021 plan year. Additionally, 2021 plan year funds may be rolled into 2022.
  • Grace Period may be extended 12 months following the end of the plan year for plans ending in 2020 as well as 2021.
  • Post-Termination Reimbursements: An employee who ceases to participate in the Health FSA during 2020 or 2021 may continue to receive reimbursement until the end of the plan year for unused benefits or contributions.
  • Mid-Year election changes allowed for plan years ending in 2021