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:

Dependent care expenses can be incurred for dependent children until they turn age 14.