The Internal Revenue Service (IRS) has issued guidance that addresses concerns regarding Health Flexible Spending Accounts (FSA) and dependent care coverage.
Notice 2020-29 addresses among other items:
- Extending claims periods for taxpayers to apply unused amounts remaining in a health FSA or dependent care assistance program for expenses incurred for those same qualified benefits through December 31, 2020.
- Expanding the ability of taxpayers to make mid-year elections for health coverage, health FSAs, and dependent care assistance programs, allowing them to respond to changes in needs as a result of the COVID-19 pandemic.
- Applying earlier relief for high deductible health plans to cover expenses related to COVID-19, and a temporary exemption for telehealth services retroactively to January 1, 2020.
Notice 2020–33 addresses rollover amounts for unused health FSA funds. The maximum unused amount from a plan year starting in 2020 allowed to be carried over to the immediately following plan year beginning in 2021 is $550.
If you have any questions, please contact Misty Baker at Misty.Baker@benefitmall.com or David Mordo at David.Mordo@benefitmall.com.