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Flexible Spending Account Updates Due to Coronavirus Relief Act

Feb 5, 2021, 11:32 AM by Courtney Fitzgerald

Kansas Department of Administration, State Employee Health Plan Letterhead

DATE:      February 5, 2021

FROM:     Janet Stanek, SEHP Director

RE:           Flexible Spending Account Updates Due to Coronavirus Relief Act 


The Federal Government recently passed the Coronavirus Relief Act. Included in that bill were some updated provisions for Flexible Spending Accounts (FSAs). The State Employee Health Plan will be implementing the following provisions of the Coronavirus Relief Act, Section 214.


CHANGE IN ELECTION AMOUNT

SEHP members with a Health Care, Limited Purpose or Dependent Care Flexible Spending Account will be able to modify the amount (but not in excess of any applicable dollar limitation) of their contributions to their Flexible Spending Account for Plan Year 2021.

EXAMPLE:

SEHP Member Sara has a Dependent Care FSA for Plan Year 2021. She just found out that her remaining balance from Plan Year 2020 will carry over due to the new Coronavirus Relief Act provisions, so she decided to contact the SEHP to have her Plan Year 2021 withholdings decreased. Sara already spent some of her funds for Plan Year 2021, so the SEHP was only able to reduce her withholdings to cover what has already been spent.


HEALTH FSA CARRYOVER FROM PLAN YEAR 2020

SEHP members with a Health Care or a Limited Purpose Flexible Spending Account will see unused contributions from Plan Year 2020 carried over for use during Plan Year 2021. The rollover amount will be available to members after the Plan Year 2020 runout period has completed (April 30, 2021). This is an increase to the previously allowed carryover of $550 that was communicated during open enrollment. 

EXAMPLE:
SEHP Member John had contributed $2,000 toward a Health Care FSA in Plan Year 2020 in anticipation of a planned surgery. His procedure was postponed due to COVID leaving his account with a $2,000 balance. Due to the new provisions, the entire balance will carry over to Plan Year 2021 and be available after April 30, 2021.


DEPENDENT CARE FSA CARRYOVER FROM PLAN YEAR 2020 

SEHP members with a Dependent Care Flexible Spending Account will now see any unused contributions from Plan Year 2020 rolled over for use during Plan Year 2021. The rollover amount will be available to members after the Plan Year 2020 runout period has completed (March 16, 2021). Previously, there was no rollover benefit for the Dependent Care FSA.

EXAMPLE:

SEHP Member Sara had a Dependent Care FSA in Plan Year 2020 to cover her daughter’s before and after school care. When school went virtual, before and after care were canceled and Sara had extra funds in her FSA without a way to spend them. Because of the Coronavirus Relief Act, Sara’s balance will carry over to her Plan Year 2021 account. Sara’s daughter has returned to before and after care, providing Sara an opportunity to spend down her balance.


SPECIAL CARRY FORWARD RULE FOR DEPENDENT CARE FLEXIBLE SPENDING ACCOUNTS WHERE DEPENDENT AGED OUT DURING PANDEMIC

EHP members that had a Dependent Care Spending Account in Plan Year 2020 and have a remaining balance, due to their dependent turning 13 during Plan Year 2020 and ageing out of eligibility for Dependent Care Spending Account coverage, will be able to resubmit for reimbursement for Plan Year 2020 expenses as well as use those funds in Plan Year 2021 until the dependent turns 14.  

EXAMPLE #1:
SEHP Member Sally had a Dependent Care FSA in Plan Year 2020 to cover her daughter’s normal summer camp expenses. Due to the pandemic, summer camp was canceled, and Sally worked from home. Her daughter turned 13 on October 30, 2020. Previously, Sally would have no way to access those funds. Now, due to the special carryover provision, Sally can use the funds she saved in Plan Year 2020 to cover her daughter’s summer camp expenses for Plan Year 2021.

EXAMPLE #2:

SEHP Member Dan had a Dependent Care FSA in Plan Year 2020 to cover his 12-year-old son’s after school care for the first half of the year. School was virtual due to the pandemic and Dan’s son turned 13 on May 25, 2020. When school started again in the fall, Dan’s son was able to return to after school care. Previously, Dan would not have been able to use his FSA dollars to cover his son’s after school care because he turned 13. Now, due to the extension, Dan can submit those after school care expenses from May – December 2020 for reimbursement.


Members who wish to make changes to their 2021 withholdings may submit a request through the Membership Administration Portal.

Instructions for how to make a mid-year change can be found here.

Should you have any questions, please email SEHPMembership@ks.gov