After several delays, the Consolidated Appropriations Act, 2021 (the “Act”) was signed into law on December 27, 2020. Although the Act primarily addresses coronavirus emergency response and relief and appropriations through September 30, 2021, it also contains several provisions of interest for employers that sponsor benefit plans, including temporary flexibility for health care and dependent care flexible spending accounts (FSAs), changes to retirement plan provisions, and certain health care plan changes related to so-called “surprise billing”. The following summarizes the provisions of the Act that affect health care and dependent care FSAs.
Continue Reading New Year, Old FSA Money?
Flexibility for Flexible Spending Accounts in Light of COVID-19
The IRS and the Treasury Department, acknowledging the widespread impact of COVID-19, have issued Notice 2020-29 and Notice 2020-33, granting much-sought flexibility for flexible spending accounts (“FSAs”) and health plans. Though the Section 125 cafeteria plan rules applicable to FSAs and health plans already permitted some limited election changes in the case of changes in status (for example, in the event of significant cost or coverage changes), they did not address the wide array of changes that many participants have wanted to make based on the ripple effects of the COVID-19 crisis. In addition, the existing Section 125 rules required that any change to the election be consistent with (as determined under the rules) and on account of the applicable change in status.
Continue Reading Flexibility for Flexible Spending Accounts in Light of COVID-19
IRS Releases Annual Cost-of-Living Adjustments
This post has been updated to reflect subsequent changes made by the IRS, as further described in this post.
The Internal Revenue Service has released its annual cost-of-living adjustments applicable to employee benefit plans. A year-to-year comparison of limitations applicable to plan sponsors can be found here: Mayer Brown 2018 Annual Limitations Chart 2018