Flexible Spending Accounts: IRS Guidance on Permissive Changes

Trucker Huss

PRESENTERS: Mary E. Powell and Lindsay R. Docto

The Consolidated Appropriations Act, 2021 (the “CAA”) contained temporary provisions for healthcare flexible spending accounts (“Healthcare FSAs”) and dependent care flexible spending plans (“Dependent Care FSAs”) (collectively, the “Spending Plans”).  The IRS recently issued Notice 2021-15, which both explained and expanded these provisions of the CAA.  Plan sponsors should decide ASAP which of these permissible changes plans will adopt, if any.

The following will be discussed with regard to permissible changes:

• Mid-year election changes for Spending Plans and related plan design considerations
• Mid-year election changes for health plan coverage
• Enhanced carryover and grace period rules
• Extended claims period/spend down provisions
• Potential designs to the Healthcare FSA to preserve health savings account (“HSA”) eligibility
• Amendment to the definition of “child” for the Dependent Care FSA
• Impact to the COBRA rules for the Healthcare FSA
• Timing of amendments and notice to participants

MCLE Credit: This program is eligible for Continuing Legal Education (CLE) credit. Following the program, please contact Joe Harrison at jharrison@truckerhuss.com to receive a CLE certificate of completion.

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