Keenan Blog

The Stimulus Bill, FSA Relief, and Maybe More

December 29, 2020

This past Sunday, President Trump signed the Consolidated Appropriations Act, 2021 (CAA), into law. All told, the CAA includes $2.3 trillion in spending, including $900 billion in a COVID relief package.

Under the CAA, employers sponsoring Health Care Flexible Spending Accounts (HCFSAs) and Dependent Care Assistance Plans (DCAPs) may elect to adopt some or all of the following changes:

  • HCFSAs and DCAPs may allow any remaining balances at the end of plan years ending in 2020 and 2021 to roll into the following plan year.
  • HCFSAs and DCAPS may extend grace periods (not to be confused with run-out-periods) for plan years ending in 2020 and 2021 to up to 12 months.
  • HCFSAs may allow employees who terminate participation during 2020 or 2021 to spend down unspent balances through the end of the plan year (similar to what is already permitted for DCAPs (if adopted)).
  • DCAPs may extend the age limit for qualifying children from 13 to 14 for a plan year for which open enrollment ended before January 31, 2020, and for any unspent funds from that plan year that are available (either by rollover or grace period) to the employee during the following plan year.
  • HCFSAs and DCAPs may allow prospective election changes during 2021 without regard to any change of status requirements.

Employers electing to adopt any or all of these changes may implement them immediately and then amend their plan documents in the following calendar year. Employers should also talk with their FSA administrators to ensure that they’ll be able to administer the change.

If you are interested in any other aspects of the CAA, the Journal of Accountancy provides an excellent summary here.

Additionally, the CAA’s COVID relief included $600 direct payments to individuals. While initially indicating that he would not sign the bill unless the direct payments were increased to $2,000, President Trump ultimately signed the legislation. Meanwhile, Congress continues to debate increasing the payment amount through stand-alone bill efforts. It is currently unclear if these efforts will pass a Senate vote.

 

About Kevin Knopf
Kevin is Keenan's Assistant Vice President of Marketing Communications and assists with authoring and distributing information on legislative and regulatory issues that may have an impact on Keenan’s clients.