Good News for Associates Participating in Flexible Spending Accounts
If you’re enrolled in a Flexible Spending Account (FSA), the recently passed stimulus bill has made some FSA changes that could work to your advantage.
The bill, officially known as the Consolidated Appropriations Act of 2021, increases the amount of unused balance that healthcare FSA participants can carry over from one year to the next. It also raises the age for dependent eligibility.
- Rollover change: If you had up to $1,000 in unused FSA funds in 2020, they have automatically been rolled over into 2021. This is an increase from the previous maximum rollover amount of $550. Unused funds up to $1,000 for 2021 will roll over into 2022.
- Dependent eligibility: Dependent eligibility has been raised to 13 years old for Dependent Care FSA participants. If a child turns 14 in 2021, only the services used when the child was 13 will be reimbursed.
- Dependent Care rollover: Unused 2020 Dependent Care FSA funds up to $1,000 have also rolled over into 2021. This is new for 2020; the Dependent Care FSA has not previously had a rollover amount. Unused funds up to $1,000 for 2021 will also roll over into the next plan year.
Effective 2023, these rules will change back to the original rules: The Health Care rollover maximum will be $550 or the IRS limit, whichever is greater; the Dependent Care FSA will not have a rollover amount; and the age limit for Dependent Care eligibility will be 12 years old.
An FSA is a special, tax-exempt savings account that can be used to pay for certain out-of-pocket health care costs, including copayments, deductibles, some prescription and non-prescription drugs, and more.
For additional information, log in to your PayFlex member website at payflex.com and click Help & Support, or call 1-844-729-3539 (TTY: 711) from 7 a.m. to 7 p.m. Central, Monday through Friday or 9 a.m. to 2 p.m. Central on Saturday.
