Covid-19 | Employer Resources

Extended Period in Which to Incur Expenses for Health FSAs and Dependent Care FSAs: Employers with a grace period or plan year that ends in 2020 (e.g., plan year ends March 31, 2020, or grace period from 2019 ends March 15, 2020), may extend the period for incurring health and/or dependent care FSA expenses up to December 31, 2020. This provision does not apply to calendar year plans that do not have grace periods. The extension of time for incurring claims is available both to cafeteria plans that have a grace period and plans that provide for a carryover. In other words, a health FSA that allows a carryover would also be permitted to amend the plan to extend the claims period to December 31, 2020. During the 2020 calendar year, employers may amend their plan to offer the ability to make prospective mid-year elections for health coverage, health FSAs, and dependent care FSAs. For plans beginning in 2020, employers may amend their health FSAs to permit employees to carryover up to $550. Clarifies 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. Clarifies that the Individual Coverage Health Reimbursement Arrangement (ICHRA) is permitted to treat healthcare premiums as incurred on (1) the first day of each month of coverage, (2) the first day of the period of coverage, or (3) the date the premium is paid.

We have formed a project team to determine how we will administer this update. We will continue to follow up as more information is available.

Employers are not required to provide these changes to members.

Examples include allowing employees to make a new election if they previously did not elect to participate, revoking an existing election, decreasing or increasing existing election amounts, and making changes for dependent care FSAs to reflect changes in the cost or availability of dependent care.

Yes, extending the period in which to incur health FSA expenses could impact HSA eligibility for some employees. If the health FSA coverage extends beyond the current plan year, a participant may not be considered HSA-eligible during the extended coverage period.

No. The increase of the carryover amount from $500 to $550 is a permanent change that applies to plan years beginning in 2020 and beyond.

IRS Notice 2020-15 provides that a health plan that otherwise satisfies the requirements to be a high deductible health plan (HDHP) will not fail to be an HDHP merely because the plan provides health benefits associated with testing for and treatment of COVID-19 prior to satisfying the applicable minimum deductible.

IRS Notice 2020-29 clarifies that the Individual Coverage Health Reimbursement Arrangement (ICHRA) is permitted to treat healthcare premiums as incurred on (1) the first day of each month of coverage, (2) the first day of the period of coverage, or (3) the date the premium is paid.

Payment of the premium for coverage made before the beginning of the plan year can be reimbursed if the insurance coverage starts during the plan year.