Details of Public Law 116-260, section 214 , Temporary Special Rules for Health and Dependent Care Flexible Spending Arrangements

The provision expands the carryover period of any unused funds in health and dependent care FSA plans for the 2020 year to plans ending in 2021, and for the 2021 year to plans ending in 2022. For plans that include a grace period, the provision permits an extension of the grace period for plan years ending in 2020 and 2021 to 12 months after the end of such plan year for any unused benefits and contributions to health FSAs and dependent care FSAs.

The provision also allows an employee who ceases to participate in an FSA during the plan years 2020 or 2021 to continue to receive reimbursements from unused benefits or contributions through the end of the plan year, including any extended grace period.

A temporary rule is added to extend the maximum age of eligible dependents from age 13 to age 14 for purposes of determining eligible dependent care FSA expenses. The rule applies to a plan year for which open enrollment ended before 1/31/2020, including any unused amounts that may be available in the following plan year due to a rollover or grace period.

In addition, the provision temporarily allows health FSAs and dependent care FSAs to allow participants to make prospective mid-year election changes for plan years ending in 2021 for any reason, and includes a special carry forward rule for dependent care FSAs where the dependent aged out during the 2020 calendar year.

20/21 21/22 22/23 23/24 N/A $ 1,800,000 $ 700,000 $ 0