Benefit Strategies | Coronavirus Resources & Information

IRS Notice 2021-58

For information on COBRA deadline relief, including when the relief expires, please review our below FAQ:

Update May 18, 2021: The IRS has issued Notice 2021-31, providing guidance on the application of ARPA. It includes an FAQ section, starting on page 5.

The American Rescue Plan Act of 2021 (ARPA) provides for a 100% federal subsidy of COBRA medical premiums (excluding Health FSAs) during the period April 1, 2021 through September 30, 2021 for those who experienced an involuntary termination, or reduction in hours, causing them to lose group health coverage. Those who qualify for the subsidy are termed Assistance Eligible Individuals (AEIs). Here’s information to know about ARPA and AEIs:

To also qualify as an AEI, a person must be COBRA-eligible as of April 1, 2021, or later AND not be eligible for other coverage during the subsidy period.

COBRA-eligible means the full period of time they could be enrolled in COBRA (typically 18 months), whether they actually enrolled or not.

Premiums for medical coverage (but not Health FSAs) for all AEIs are subsidized at 100% during the coverage period.
The subsidy period lasts for up to six months (through September 2021) except for AEIs who exhaust their COBRA eligibility or qualify for other coverage. AEIs receiving the subsidy are required to inform the plan if they’re eligible for other coverage.
AEIs who become COBRA-eligible after April 1, 2021, receive the subsidy through September 2021, even if they receive less than six months’ premium subsidies.
The law establishes an Extended Election Period of 60 days from receipt of the ARPA eligibility notice during which AEIs can enroll in subsidized coverage retroactive to April 1.
Elections made under the Extended Election Period remain in effect until the end of the AEI’s maximum COBRA continuation coverage period.
Employers have the option to allow AEIs to change medical coverage (but not other benefits) as of April 1, but AEIs are limited to switching to a plan with the same or lower premium plan than they had prior to the qualifying event.
Employers are responsible for subsidizing the full premium plus the 2% administration fee. Companies will be reimbursed by credits against payroll taxes owed.

Benefit Strategies has been communicating with our broker partners and COBRA clients on ARPA and AEIs as more information has been released from the Department of Labor. This includes two communications requesting that employers review the termination types they provided to us for Qualified Beneficiaries (QBs).

ARPA – Dependent Care Assistance Plans Maximum Increase

We've created a pdf FAQ that can be downloaded below to answer some common questions.

DCAP FSA CHANGES FAQ

On March 11, 2021, the American Rescue Plan Act (ARPA) was signed into law. One of the law's provisions is to temporarily increase the maximum annual contribution amount for the Employer-sponsored Dependent Care Assistance Plans (DCAPs). The law provides for the following DCAP increases for the 2021 calendar year:

The maximum contribution has been raised to $10,500
For married couples filing separate tax returns, the maximum has been raised to $5,250

These increases are only in place for the calendar year 2021. Employers are not required to adopt the new maximums to their plan.

Employers who wish to adopt the temporary increase must amend their Cafeteria Plan Documents before the end of the plan year in which they decide to increase the limit. For calendar-year plans, this means the documents must be amended by December 31, 2021.

Benefit Strategies is currently working on reconfiguring its system to accommodate the increased election limits. There will be a separate amendment that will be made available later this year to document the change, most likely during the second quarter.

Action Needed

Please use the below election form to adopt this adjustment and report it to Benefit Strategies.

DCA Maximum Increase Form

The Consolidated Appropriations Act of 2021

The Consolidated Appropriations Act of 2021 was signed into law on December 27, 2020. Included are various options employers may choose to add to their Flexible Spending Account (FSA) plans to provide relief for employees whose FSA elections may have been negatively impacted by the COVID-19 pandemic.

Action Needed

If you would like to make changes to your FSA plan, please click the link below to complete the form. Below is a high-level overview of each of the changes included in the legislation. Please note that none of these changes are mandatory. Employers have the option to make one or more of the changes, all of the changes, or make no changes at all. Should an employer choose to make changes, those selections will be in addition to the mandatory one year filing extension already in place.

Please note: If a form was previously submitted, all prior submissions will be disregarded and the most recent submission will be used.

CONSOLIDATED ACT FORM

Permit Health and Dependent Care FSAs to carryover all unused amounts from plan years ending 2020 to plan years ending 2021. This is also permitted for plan years ending 2021 to plan years ending 2022.

Benefit Strategies Note: If your Health FSA plan ends December 31, 2020 and you already have the carryover provision on your Health FSA, please be aware that the normal automatic rollover, up to your plan’s rollover maximum, will happen on January 1, 2021 as planned. If you choose to allow the change for all unused amounts to rollover, including for Dependent Care FSAs, we will handle those rollovers separately.

Permit a 12-month grace period for unused benefits or contributions in Health FSA and Dependent Care FSA for plan years ending in 2020 and 2021.
Permit Health FSA participants who terminate during the 2020 or 2021 plan year to spend down their unused balances for expenses incurred through the end of the plan year in which the termination occurred, including any grace period.
Permit the maximum age of eligible dependents for Dependent Care FSAs to be through age 13 (currently through age 12) for the 2020 plan year and for unused amounts from the 2020 plan year to be carried over into the 2021 plan year.
Permit a prospective change in election amounts for Health and Dependent Care FSAs for plan years ending in 2021 without a corresponding change in status event.

IRS Cafeteria Plan Amendments

On May 12, 2020, the IRS released two notices providing increased flexibility with Flexible Spending Accounts (FSA). Notice 2020-29 allowed for mid-year elections and extension of the plan year end date, as well as Notice 2020-33 provided a permanent change to the maximum amount permitted on the FSA rollover option. Options under Notice 2020-29 have expired. Since Notice 2020-33 is permanent, that option is still available now and for future plan years. It allows for the maximum rollover amount on a Health FSA to be equal to 20% of the federal plan maximum election amount for that plan year. If you wish to add the rollover option to your Health FSA or to increase the rollover maximum amount, please contact your Account Manager.

DOL Guidance on Extensions of Claim Filing and Appeal Deadlines

Information on Qualifying Events For Enrollment and Election Changes

Healthcare FSAs and Limited Purpose FSAs

The IRS permits changes to an election for the below situations (called Qualifying Events). We are continually monitoring regulations to determine if any new Qualifying Events will be permitted due to the extraordinary circumstances being experienced across the country.

Qualifying Events Due to Employment Changes:

You or your legally married spouse’s termination of employment
Your legally married spouse’s commencement of employment
You or your legally married spouse’s change from part-time to full-time, or full-time to part-time status
You or your legally married spouse’s unpaid Leave of Absence (LOA)

Other Qualifying Events:

Marriage
Divorce
Birth or Adoption
You or your legally married spouse’s or your dependent’s death

How To Make A Change To Your Health FSA Election If You Have Experienced A Qualifying Event:

NEW! If your normal method for submitting FSA changes is submitting our paper FSA Status Change Form, please note we now have an electronic fillable form and no longer use the paper form. The electronic form can be found by clicking the button below. You can also access the form from the FSA page in the Resources section of benstrat.com.

Status Change Form

Dependent Care FSAs

The IRS permits changes to an election for the below situations (called Qualifying Events). We are continually monitoring regulations to determine if any new Qualifying Events will be permitted due to the extraordinary circumstances being experienced across the country.

Qualifying Events Due to Changes in Childcare Arrangements:

You no longer need childcare
You no longer need childcare as frequently
You have had a change in the amount you pay for childcare (increase or decrease)
You now need childcare - this is a Qualifying Event to add the Dependent Care FSA if you are not currently enrolled.

Qualifying Events Due to Employment Changes:

You or your legally married spouse’s termination of employment
Your legally married spouse’s commencement of employment
You or your legally married spouse’s change from part-time to full-time, or full-time to part-time status
You or your legally married spouse’s unpaid Leave of Absence (LOA)

Other Qualifying Events:

Marriage
Divorce
Birth or Adoption
You or your legally married spouse’s or your dependent’s death

How To Make A Change To Your Dependent Care FSA Election If You Have Experienced A Qualifying Event:

NEW! If your normal method for submitting FSA changes is submitting our paper FSA Status Change Form, please note we now have an electronic fillable form and no longer use the paper form. The electronic form can be found by clicking the button below. You can also access the form from the FSA page in the Resources section of benstrat.com.

Status Change Form

Parking and Transit Accounts

IRS regulations allow participants to make changes to Parking and Transit elections at any time. This includes decreasing or increasing your election amount or suspending enrollment in the plan.

How To Make A Change To Your Parking and/or Transit Account Election or Suspend Enrollment:

You will need to contact your employer so they can update your payroll records and they will then notify Benefit Strategies to make the change in our system. Keep in mind your employer may have deadlines for the changes to be made in time for the following payroll.

Health Savings Accounts (HSAs)

IRS regulations allow HSA account holders to make changes to the amount they are contributing to their HSA at anytime. This includes no longer making any contributions.

How To Make A Change To Your HSA Contribution Amount:

You will need to contact your employer so they can update your payroll records and they will then notify Benefit Strategies to make the change in our system. Keep in mind your employer may have deadlines for the changes to be made in time for the following payroll or other policies surrounding timing of HSA contribution changes.

How changes can be made with BenStrat

Clients should always use their normal method for submitting changes to Benefit Strategies.

If your normal method for submitting FSA changes is submitting our paper FSA Status Change Form, please note we now have an electronic fillable form and no longer use the paper form. The electronic form can be found below. You can also access the form from the FSA page in the Resources section of benstrat.com.

Status Change Form

Mid-Year FSA election changes: You can use our calculator below to determine the impact of a mid-year FSA election change.

Assess Impact of Mid-Year Election Change

CARES Act Provides New Section 213d Eligible Expenses

The CARES Act

What this means for you

Over-the-counter items eligible under an FSA

Two permanent changes to FSA and HSA eligible expenses have been made under the federal CARES Act law signed March 27, 2020. Both of these changes are retroactive and effective for expenses incurred on or after 1/1/2020.

1) Over the Counter (OTC) drugs and medicines no longer require a prescription to be eligible. This includes products such as cough syrup, allergy medicine and pain relievers.

2) Menstrual care products (i.e. tampons, liners, pads, cups, etc.) are now eligible.

Eligible Expense Lists

Online Shopping Options for FSA and HSA Eligible Expenses

Services We Offer To Assist During This Time

Direct Billing of furloughed and LOA employees
Emergency Assistance Plans
Work From Home Expenses Plans

Contact sales@benstrat.com for a proposal or to learn more.

Coronavirus Resources & Information – Employer

Our Benefit Plans And COVID-19: Information and Solutions To Help

Action Needed

Action Needed

What this means for you

Eligible Expense Lists

Follow our biweekly HSA GPS blog so we can work in collaboration on HSA administration.