Stay in the Know: Reminders and Updates

N. Rios

JAN. 4, 2021

All of the 2021 benefit maximums and legislative updates can be found here. Learn more about how the Consolidated Appropriations Act of 2021 can make FSAs more flexible for participants, and what is needed to implement the changes to plans.

REMINDERS

-For 2021, the maximum contribution limit for employees health flexible spending accounts (health FSAs), made pre-tax through salary reductions, remains unchanged at $2,750.

-The dependent care FSA maximum is $5,000 per year, per family.

-The monthly commuter benefits limit in 2021 for mass transit and parking remains at $270

-Health Savings Account (HSA) annual maximums for 2021 are $3,600 for single, and $7,200 for family.

-CARES Act Expands FSA-Eligible Purchases: As part of the CARES Act, FSAs, HSAs and HRAs can now be used to pay for over-the-counter drugs and medications without a prescription. The coronavirus-related legislation also allows FSAs, HSAs and HRAs to pay for certain menstrual care products, such as tampons and pads, as eligible medical expenses.

LEGISLATION UPDATES

With the passage of the Consolidated Appropriations Act of 2021, health and dependent care FSA plans are permitted to:
-Carry over unused amounts from 2020 to 2021, and from 2021 to 2022

-Permits a 12-month grace period for unused benefits or contributions in health and dependent care FSAs for plan years ending in 2020 or 2021

-Increase the age of dependents participating in a DCA from 12 to 13 for the 2020 plan year

-Permit Health FSA participants who terminate during the 2020 or 2021 plan year to spend down their unused balances for expenses incurred through the end of the plan year in which the termination occurred, including any grace period

-Relaxed rules for mid-year prospective contribution changes are also extended to 2021

*Carry over and grace period rules are based on how plans are currently set up. Plans cannot allow both a carry over provision and a grace period.

These updates are permissive, not mandatory. In order to make changes, an amendment must be signed.