New guidance from the Internal Revenue Service allows employers to temporarily give their employees extra benefits leeway in making changes to their flexible spending accounts and health savings accounts.
The guidance, in response to the COVID-19 pandemic, also allows employees to make changes to their health plans outside of the traditional open enrollment period. This item sets out the changes that all employers should note.
However, 2020 was an abnormal year. For example, stay-at-home orders left employees with unused money in their dependent care FSAs because they unexpectedly did not have to pay for child daycare.
The temporary changes
Recognizing the current extraordinary situation, the new guidance makes several temporary changes:
It is important to know that:
The pandemic has been difficult for employers and employees alike. These temporary changes will make it a little easier for both to cope.