On May 12, 2020, the IRS issued Notice 2020-29, giving employers the option to make changes to a § 125 cafeteria plan that would allow eligible employees to make prospective midyear elections and changes to existing elections during 2020 as follows:
- With respect to employer-sponsored health coverage under fully insured and self-insured plans:
- Make a new election on a prospective basis, if the employee initially declined to elect employer-sponsored health coverage;
- Revoke an existing election and make a new election to enroll in different health coverage sponsored by the same employer on a prospective basis; and
- Revoke an existing election on a prospective basis, provided that the employee attests in writing that the employee is enrolled, or immediately will enroll, in other health coverage not sponsored by the employer.
- Revoke an election, make a new election, or decrease or increase an existing election applicable to a health FSA on a prospective basis.
- Revoke an election, make a new election, or decrease or increase an existing election regarding a dependent care assistance program on a prospective basis.
Health FSA and DCFSA Temporary Extended Claim Periods
Notice 2020-29 provides employers with the option to amend a cafeteria plan to allow unused funds in health FSAs and DCFSAs as of the end of a grace period ending in 2020 to be used for medical care and dependent care expenses incurred through December 31, 2020. For plans operating on a non-calendar-year basis, employers have the option to allow unused funds in health FSAs and DCFSAs to be applied toward expenses incurred through December 31, 2020.
These extended claim periods constitute disqualifying coverage for employees enrolled in a High Deductible Health Plan (HDHP), making those employees ineligible to contribute to a health savings account during the extended period unless the employee’s FSA is a limited purpose FSA.
HDHP Relief
Notice 2020-29 clarifies that employees enrolled in HDHPs are covered for COVID-19 testing and treatment as well as telehealth services (whether or not those are related to COVID-19) retroactive to January 1, 2020, without having to satisfy a minimum deductible limit.
Having HBL’s team of ERISA and employment attorneys on your side means having someone you can depend on for clarification of newly enacted rules and regulations. Call our team today at 678-439-6236.
Hall Benefits Law, LLC
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