FSA rules relaxed in response to COVID-19
During Open Enrollment last year, you may have elected a Flexible Spending Account (FSA) to have money taken from your paycheck, pretax, to pay for dependent day care or certain medical expenses not covered by your health plan. Now, your expenses may have changed due to the coronavirus pandemic, so the IRS has relaxed rules pertaining to Health Care and Dependent Day Care FSAs. These changes are effective through the end of 2020.
Increase or decrease your FSA contribution
If you have a Health Care or Dependent Day Care FSA, you can increase, reduce, or cancel your contributions without a qualifying life event. If you are not currently enrolled in an FSA, you may now enroll outside of the normal enrollment period. One plan change without a qualifying life event will be allowed, through Sept. 30, 2020.
Keep in mind:
- If you opt to stop participating in an FSA, contributions already made will not be refunded, however, you may use your FSA to get reimbursed for expenses incurred through the end of the year.
- If increasing your FSA, be cautious—unused funds are forfeited, except for $550 in your Health Care FSA, which can roll over into the following plan year.
Other Health Care FSA changes
- You can now use your Health Care FSA to pay for or receive reimbursement for:
- Over-the-counter drugs and medicines without a doctor’s prescription.
- Menstrual care products, which are now considered a qualified medical expense. All expenses incurred after Dec. 31, 2019, qualify, and the provision has no expiration date.
- The amount of unused Health Care FSA contributions you can carry over to 2021 has increased by $50 for a total of $550. Dependent Day Care FSAs do not have a carry-over feature.