The IRS Releases Two New Healthcare Notices
Dear Brooks Financial Group (BFG) Family,
On May 12, the IRS released two notices allowing employees during 2020 to make changes to their enrollments in employer-sponsored health plans, and to adjust pre-tax contributions to health flexible spending accounts (FSAs) and dependent care flexible spending accounts (Dependent Care FSAs).
These enrollment changes are designed to allow employers to respond to changes in employee needs as a result of the COVID-19 pandemic. Ordinarily, these mid-year changes are not permitted without a qualifying event. Here are the specifics of both IRS notices:
- In IRS Notice 2020-29, the IRS said it would allow increased flexibility regarding mid-year election changes under a Section 125 cafeteria plan for group health plans as well as health & dependent care FSAs.
- For group health plans, employees will now be able to enroll in employer-sponsored health plans during the plan year even if they had previously declined coverage. Employees are also able to switch health plans and coverage levels.
- For both health FSAs and dependent care FSAs, employees will be able to enroll, drop coverage and increase or decrease payroll contributions during 2020. For plan years ending before 12/31/2020, employers can amend a health or dependent care FSA plan to permit participants to spend-down through year-end 2020 any remaining amounts from 2019 that would otherwise be forfeited.
- In IRS Notice 2020-33 , the IRS announced more options with respect to extending the period for incurring FSA expenses, and increasing the health FSA carry-over unused funds at the end of the plan year to $550.
As always, please feel free to reach out to your corporate benefits advisor or relationship manager with any questions or guidance regarding this update.
If you feel this information and our leadership would benefit others in your circles, please feel free to share it with them and recommend they contact us to receive these communications directly.
We hope you are and your families are well, safe & mindful.
Your Brooks Financial Team