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FSA with 06/30 pye - Covid-related


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Client has FSA that includes dependent care reimbursement, health insurance premium conversion, and the medical expense reimbursements.  Two questions: 

  1. One employee has $1210 left in Daycare balance, but day care was closed and now summer camps have been canceled.  Is there any way to convert back to taxable income?
  2. Other employee's insurance premium has increased.   She wants to use the amount designated for medical expense reimbursement to pay the premium difference.  She doesn't have enough expenses and she doesn't want her pay decreased to cover the premium when this money is sitting there.   

I'm not very familiar with cafeteria plans, but both asks seem untenable.  Any other suggestions on how to remedy?  

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Once contributions have been made to spending accounts, the only way to get the amounts out is through reimbursement of qualified expenses (and employer group health plan premiums are not allowed to be reimbursed from FSAs).

The employer could choose to add a grace period on to it's plan to allow individuals to incur expenses up through December 31, 2020 under the new COVID 19 guidance.  The employer could also choose to amend the plan prior to the end of the plan year to permit a rollover.

If it wasn't so late in the plan year, the employer also could decide to take advantage of the opportunity to allow participants to change their elections, but with a 6/30 PYE, that isn't very helpful for these situations.

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