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Coronavirus Stimulus Bill Creates Flexibility for FSA Money

The recent COVID-19 relief bill passed by Congress provides relief with respect to flexible spending account and dependent care account funds that went unused during 2020.

  • For health FSAs:
    • Can allow the carryover of unused FSA funds with no dollar limit from a plan year ending in 2020 and/or 2021 to a plan year ending in 2021 and/or 2022.
    • Grace period can be extended up to 12 months after the end of the plan year for plan year ending in 2020 and/or 2021 instead of the typical two and half months timeframe.
    • Employees can change their FSA contributions for the plan years ending in 2021 without a qualifying event.
  • For dependent FSAs:
    • Can allow unused funds to carry over with no dollar limit from plan year ending in 2020 and/or 2021 to a plan year ending in 2021 and/or 2022.
    • Employees can change the FSA contributions for the plan years ending in 2021 without a qualifying event.
    • Reimbursement for expenses can be permitted for children up to age 14 instead of 13.