The IRS has granted relief for 125 cafeteria plans, health flexible spending arrangements and dependent care assistance programs.
In Notice 2020-29, the IRS has:
- Extended claims periods for taxpayers to apply unused amounts remaining in a health FSA or dependent care assistance program for expenses incurred through December 31, 2020.
- Expanded 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.
- Applied earlier relief for high deductible health plans to cover expenses related to COVID-19, and a temporary exemption for telehealth services retroactive to January 1, 2020.
Notice 2020-33 increases the limit for unused health FSA carryover amounts from $500 to a maximum of $550, as adjusted annually for inflation.
The drawbacks? The rules are very specific, and the notices go into great detail on how exactly the new rules work. Fortunately, Notice 2020-29 contains examples so those who have elected the relevant plans can see more clearly how to take advantage of the new rules. A summary of the rules is available in the IRS Newsroom.
READ MORE
