New IRS Benefit Plan Guidance
The IRS has released new guidance that provides employers with more flexibility to make plan changes in light of COVID-19 and the financial stress it has caused. Specifically, employers may allow employees to:
- Drop employer health insurance, if they have another coverage option;
- Enroll in employer health insurance, if they did not do so earlier in the year;
- Add eligible family members to their existing coverage;
- Change plan options (from employer health insurance options available to them); and/or
- Enroll in or change contributions to a health care or dependent care FSA mid-year.
The IRS also announced:
- The health care FSA carry-over amount has been increased to $550 (from $500);
- An extension of the earlier relief for high deductible health plans related to pre-deductible coverage of services related to COVID-19 and telehealth and other remote care services, retroactively to January 1, 2020; and
- For unused amounts remaining in a health FSA or a dependent care assistance program at the end of a grace period or plan year ending in 2020, a § 125 cafeteria plan may allow employees to apply those unused amounts to cover applicable expenses incurred through December 31, 2020.
An employer must amend its plan(s) no later than December 31, 2021, to adopt any of the optional changes, and must communicate these changes to employees.
To read the IRS announcements, click on the links below: