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IRS Announces Increased Flexibility for Certain Plans

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The Internal Revenue Service (IRS) issued two notices to assist with the nation's response to the 2019 Coronavirus outbreak. The first notice increases "flexibility with respect to mid-year elections under a §125 cafeteria plan during calendar year 2020 related to employer-sponsored health coverage, health Flexible Spending Arrangements (health FSAs), and dependent care assistance programs (DCAPs). This notice also provides increased flexibility with respect to grace periods to apply unused amounts in health FSAs to medical care expenses incurred through December 31, 2020, and unused amounts in dependent care assistance programs to dependent care expenses incurred through December 31, 2020." Finally, this notice clarifies that recently announced exemptions for high deductible health plans (HDHPs) to remain HSA qualified apply retroactively to January 1, 2020. In other words, an HDHP will not lose qualified status for covering any expenses required to be covered with zero cost sharing under the FFCRA.


If your Plan currently offers the $500 carryover, the second notice increases "the carryover limit (currently $500) of unused amounts remaining as of the end of a plan year in a health Flexible Spending Arrangement (health FSA) under a § 125 cafeteria plan that may be carried over to pay or reimburse a participant for medical care expenses incurred during the following plan year... Second, this notice clarifies the ability of a health plan to reimburse individual insurance policy premium expenses incurred prior to the beginning of the plan year for coverage provided during the plan year.

If you would like to discuss the applicability of any of this guidance to your §125 cafeteria plan or health coverage, please contact our Enterprise Service Team at to arrange a phone call with your BCC Representative.