May 2020: New IRS FSA Guidelines due to COVID

Many Flexible Spending Account participants have expressed concerns that they may forfeit money due to the closure, cancellation, or delay of elective medical procedures, dental appointments, or summer camps. In response, the IRS recently issued revised guidelines for sponsors of FSA’s. The new guidelines allow GIC plan participants greater flexibility and opportunity to use the funds withheld during FY20 and to adjust contributions for FY21.

How the New IRS Guidelines Affect You 

  • You can make changes to your FY21 elections through August 30, 2020.
  • You have until December 31, 2020, to incur claims to apply to your FY20 FSA. This effectively extends the plans’ current grace period 3.5 months, from September 15 to December 31.
  • The FY20 claim filing deadline for claims or purchases with a date of service through December 31, 2020, is now January 31, 2021, instead of October 31, 2020.

Reminders

  • While you may change your FY21 elections through August 30, you must make your initial enrollment by the June 1 annual enrollment deadlin
  • You may not have a cancellation effective date that is more than 60 days in the past, although you may be refunded for deductions withheld after that effective date (if you have not already received claim reimbursements for that money).

Other Notes

  • Guidelines issued in April allowed those who experienced a qualifying event, such as closure of a daycare facility, to reduce or stop their dependent care account (DCAP) deductions without documentation. 

Thank you,

Benefit Strategies, LLC

commonwealth@benstrat.com 



Human Resources