Wednesday, June 2, 2021
Flexible Spending Accounts
The Consolidated Appropriations Act, 2021, was passed by both houses of Congress on December 21, 2020, and was signed into law on December 27, 2020. Flexible Spending Accounts (FSAs) now have new options regarding how funds are managed, in addition to the ability to carry over all remaining funds from 2021 into 2022. Plus, the limit on Dependent Care Flexible Spending Accounts (DCFSAs) has increased to $10,500 a year.
In the past, your FSA contribution amounts could only be adjusted during Annual Enrollment or with certain life events. In 2020, the IRS issued new guidance, making it possible for you to increase or decrease your contributions, stop contributions altogether or open new FSA mid-year to help accommodate the financial needs of you and your family.
With the new legislation passed last year, this flexibility was extended into this year, allowing you to make changes to your FSA elections during the year even if you have not experienced a life event. Now that your remaining funds from 2020 have carried over into 2021, you may want to adjust your contributions for 2021. You can make these changes any time except during the last two months of the benefits year (i.e., November and December).
It is important to note that if you choose to reduce your 2021 contribution amount, you cannot decrease it below what you have already contributed in payroll deductions, have already spent, or have already been reimbursed.
APFA National Health Department Chair
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