Changes to Flexible Spending Accounts
Flexible Spending Account Rule Changes
At the end of December, 2020, the "Consolidated Appropriations Act of 2021" was passed, and it included important changes to the rules governing Health Care and Dependent Care Flexible Spending Accounts. The changes affect plan years 2020 and 2021. The provisions are optional for employers/plan sponsors to adopt. As noted in a previous edition of InBrief, here are more details on the FSA plan changes and how they impact participants:
Expanded Grace Period for the Health and Daycare Flexible Spending Accounts
The grace period, which is the date by which employees must spend down their healthcare and dependent care flexible spending account money is currently 3/15/21 for the 2020 plan year. Under these new provisions, the grace period to incur expenses (by plan year) was extended through the end of the year as shown:
- For plan year 2020 the grace period to incur expense for unreimbursed funds ends 12/31/2021. The last day to submit receipts for:
- Health Spending Accounts - 4/30/2022
- Daycare Flexible Spending Accounts - 12/31/2021
- For plan year 2021 (current plan year) the grace period to incur expenses for unreimbursed funds ends 12/31/2022. The last day to submit receipts is 12/31/2022.
- For plan year 2022 the grace period ends 3/15/2023. The last day to submit receipts for:
- Health Spending Accounts - 3/31/2023
- Daycare Flexible Spending Accounts - 12/31/2022
Dependent care expenses can be incurred for dependent children until they turn age 14.