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Flexible Spending Account (FSA) Changes Due to COVID-19

Making changes to your FSA

The Consolidated Appropriations Act of 2021 increased flexibility for FSA participants to make mid-year changes during the 2021 calendar year. Eligible employees have a one-time opportunity to revoke, enroll, decrease or increase their FSA elections for the 2021 plan year.

Changes will be effective the first day of the month following the receipt of the form subject to payroll processing deadlines. Please note that decreases cannot be less than amounts for which you have already received reimbursement from the plan. Unfortunately, the IRS does not permit a refund of pre-tax dollars that are contributed to an FSA.

Health FSA Carry Forward Limit Temporarily Removed

Participants can carry forward any unused funds from 2020 to 2021 and 2021 to 2022.

Dependent Care FSA Contribution Can Be Increased

While many Americans continue to be affected by the ongoing pandemic, the IRS has provided additional options to help FSA participants save money and expand certain rules that allow more flexibility. One recent announcement comes under the American Rescue Plan Act (ARPA) in which employers have the opportunity to increase the maximum Dependent Care contribution amount to $10,500 for 2021. For married couples who file a tax return separately, your contribution can be increased to $5,250. This temporary provision is only applicable for the 2021 plan year.

Dependent Care FSA Extended Grace Period

The Dependent Care FSA grace period has been extended from March 15 to December 31 for the 2020 and 2021 plan years.

Dependent Care FSA Eligibility Temporarily Extended To Age 14

Temporarily allows for the reimbursement of eligible dependent care expenses for dependents up to age 14 for the 2020 and 2021 plan years.

Health FSA Eligible Expenses Update

Under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, signed into law on March 27, 2020, the following are now eligible expenses for reimbursement through your Health FSA:

  • Over-the-counter (OTC) drugs and medicines without a doctor’s prescription
  • Menstrual care products

These OTC changes are effective for expenses incurred after December 31, 2019.

Reimbursements of Post-Termination Expenses for FSAs

Terminated participants can receive reimbursement from unused benefits or contributions through the end of the plan year when participation ceased (including grace periods). This provision applies to the Health FSA and Dependent Care FSA for the 2020 and 2021 plan years.

2021 Health FSA Change Options

If you estimate that you will not incur enough eligible Health FSA claims by December 31, 2021 your options are:

  1. Do nothing
    • Your annual election amount will remain the same. At the end of the plan year eligible employees can carry forward any unused funds to the 2022 plan year
  2. Revoke your annual election amount
    • Your contributions will stop for the remaining pay periods of the year as of the pay date change effective date
    • If your total of claims paid is more than the amount contributed year to date as of the pay day change effective date you are not allowed to revoke your annual election (see decrease your annual election amount)
  3. Decrease your annual election amount to what you estimate your eligible healthcare expenses will be
    • Your new annual election amount can’t be lower than your total of claims paid or the amount contributed year to date as of the pay date change effective date

Steps:

  1. Estimate the total amount of your expected Healthcare expenses through December 31, 2021
  2. If you want to decrease or revoke your Health FSA review your total of claims paid and year to date contributions by reviewing your account information online at www.padmin.com or contacting the P&A Group at (800) 688-2611
  3. Use the FSA calculator to determine the lowest electable annual election amount
  4. Complete and submit a COVID-19 Change in Election Authorization form to the Human Resources Benefits Unit at benefits@sonoma-county.org or fax to (707) 565-1139.

If you estimate that you will incur more than your annual election amount in eligible Health FSA claims by December 31, 2021 your options are:

  1. Do nothing
    • Your annual election amount will remain the same
  2. Increase your annual election amount up to the annual maximum of $2,750
    • Your new bi-weekly contributions are calculated by taking the difference between your new annual election amount and the amount you contributed year to date as of the pay date change effective date and dividing the difference by the remaining number of pay periods in the calendar year 

Steps:

  1. Estimate the total amount of your expected Healthcare expenses through 12/31/2021
  2. Check your account information on the P&A Group website at www.padmin.com
  3. Complete and submit a COVID-19 Change in Election Authorization form to the HR Benefits Unit at benefits@sonoma-county.org or fax to (707) 565-1139.

You didn’t enroll in the Health FSA at Annual Enrollment and want to enroll now:

  1.  Enroll in the Health FSA up to the annual election maximum of $2,750
    • Your effective date of coverage will be the first of the month following the receipt of your completed form by the Human Resources Benefits Unit
    • Only eligible expenses incurred after your effective date are eligible
    • Your bi-weekly contributions are calculated by dividing the annual election amount by the remaining number of pay periods in the calendar year as of the pay date change effective date

Steps:

  1. Estimate the total amount of your expected Healthcare expenses from your effective date of coverage through 12/31/2021
  2. Complete and submit a COVID-19 Change in Election Authorization form to the Human Resources Benefits Unit at benefits@sonoma-county.org or fax to (707) 565-1139.

2021 Dependent Care FSA Change Options

If you estimate that you will not incur enough eligible Dependent Day Care claims by December 31, 2021 your options are:

  1.   Do nothing.
    • Your annual election amount will remain the same
    • Eligible expenses incurred on or after your effective date through December 31, 2022 are eligible for reimbursement from your 2021 FSA
  2. Revoke your annual election amount
    • Your contributions will stop for the remaining pay periods of the year as of the pay date change effective date
  3. Decrease your annual election amount to what you estimate your dependent care expenses will be
    • Your new annual election amount can’t be lower than the amount contributed year to date as of the pay date change effective date

If you estimate that you will incur more than your annual election amount in eligible Day Care claims by December 31, 2021 your options are:

  1. Do nothing
    • Your annual election amount will remain the same
  2. Increase your annual election amount up to the annual maximum of $10,500
    • Your new bi-weekly contributions are calculated by taking the difference between your new annual election amount and the amount you contributed year to date as of the pay date change effective date and dividing the difference by the remaining number of pay periods in the calendar year

Steps:

  1. Estimate the total amount of your expected Day Care expenses through 12/31/2021
  2. Check your account information on the P&A Group website at www.padmin.com
  3. Complete and submit a COVID-19 Change in Election Authorization form to the Human Resources Benefits Unit at benefits@sonoma-county.org or fax to (707) 565-1139.

You didn’t enroll in the Dependent Care Assistance at Annual Enrollment and want to enroll now:

  1.  Enroll in the Dependent Care Assistance Plan up to the annual maximum of $10,500
    • Your effective date of coverage will be the first of the month following the receipt of your completed form by the Human Resources Benefits Unit
    • Only eligible expenses incurred after your effective date are eligible
    • Your bi-weekly contributions are calculated by dividing the annual election amount by the remaining number of pay periods in the calendar year as of the pay date change effective date

Steps:

  1. Estimate the total amount of your expected Day Care expenses from your effective date of coverage through 12/31/2021
  2. Complete and submit a COVID-19 Change in Election Authorization form to the Human Resources Benefits Unit at benefits@sonoma-county.org or fax to (707) 565-1139.

FSA Change Examples

The following examples assume a January 1, 2021 Flexible Spending Account start date, a June 28, 2021 submission date and July 7, 2021 pay date.

Scenario #1:

  • You are enrolled in the Health FSA for an annual election of $1,000.
  • By June 28, 2021 you have contributed $500 to your account.
  • You have been reimbursed for $600.
  • You would like to cancel your participation.
  • Your new annual election as of July 1 must be equal to our greater than $600, the amount of your reimbursement.
  • If your new annual election amount is $600, your new bi-weekly Health FSA deductions for July through December 2021 will be $7.70.

Scenario #2:

  • You are enrolled in the Health FSA for an annual election of $1,000.
  • By June 28, 2021 you have contributed $500 to your account.
  • You have been reimbursed for $300.
  • You would like to cancel your participation.
  • Your new annual election as of July 1 will be $500, the amount of your year-to-date deductions.
  • You will have no Health Care FSA deductions taken from your paycheck for July through December 2021.

Scenario #3:

  • You are enrolled in the Dependent Care Assistance Plan for an annual election of $5,000.
  • By June 28, 2021 you have contributed $2,500 to your account.
  • You would like to revoke your participation.
  • Your new annual election as of July 1 will be $2,500, the amount of your year-to-date deductions.
  • You will have no Dependent Care FSA deductions taken from your paycheck July through December 2021.

How to Submit Changes to Your 2021 Health Care FSA and or Dependent Care Assistance Plan

  1. Download the COVID-19 Change in Election Authorization form.
  2. Enter your personal information.
  3. Under the Pre-Tax FSA Benefit Election Change section check the box for the change you are making.
  4. Enter your current annual election and the new annual election.
  5. Sign and date the form.
  6. Return the completed form to the Human Resources Benefits Unit by:
    • Scanning and emailing to benefits@sonoma-county.org
    • Faxing to (707) 565-1139
    • Place completed form in the locked tan drop box outside the Northside of 575 Administration Drive (outside main entrance of Human Resources)