The IRS released Notice 2020-29 to give taxpayers flexibility in changing their health care and dependent care elections for the rest of the year. In addition, taxpayers have more time to make claims for expenses from their health flexible spending arrangements (FSAs) and dependent care assistance programs.
Notice 2020-29 allows cafeteria plans to amend their plans to allow employees, during 2020, to prospectively:
- Select to participate or cease to participate in an employer’s health care plan, enroll in a different health plan, or make changes to their health FSA or dependent care assistance program elections or contributions
- Apply unused amounts in health FSAs or dependent care assistance programs at the end of the grace period or plan year in 2020 to pay medical or dependent care expenses incurred through the end of 2020
- Allow relief for COVID-19-related expenses and coverage for telehealth services by high deductible health plans retroactively to January 1, 2020
In addition, in Notice 2020-33, the IRS increased the amount that can be carried over at the end of 2020 in a health FSA to $550 from $500.
If you have any questions, contact the Experts at Henssler Financial:
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