IRS to Allow Mid-Year Changes to Employee Health Plans and Dependent Care Elections

 In Blog

Contributed by: Paula DePlanche, CPA, Partner and Sarah Scheffer, Marketing Director

The IRS released guidance to temporarily allow changes to section 125 cafeteria plans.

The changes include…

  • Extending the claims period for health flexible spending arrangements (FSAs) and dependent care assistance programs. Taxpayers can 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.
  • Allowing taxpayers the opportunity to make mid-year changes for health coverage, health FSAs, and dependent care assistance programs.
    • For currently enrolled employer sponsored health coverage –
      1. make a new prospective election that the employee may have initially declined
      2. change coverage options, add family members, prospectively
      3. revoke an existing election and make a new election to enroll in a different health coverage sponsored by the same employer on a prospective basis
      4. revoke coverage (if certified in writing they are enrolled in another health care plan not sponsored by the employer) on a prospective basis coverage
  • Relief for high deductible plans to cover expenses related to COVID-19, as well as allowing for telehealth services retroactively to January 1, 2020.
  • Increasing the FSA carryover amount from $500 to $550 for the 2020 plan year.