IRS allows benefits changes in response to COVID-19

July 22, 2020

UNIVERSITY PARK, Pa. — In response to the COVID-19 pandemic, the IRS recently issued Notice 2020-29. The notice permits employers to offer greater flexibility to employees with respect to mid-year election changes for health care plans and Flexible Spending Accounts (FSA), which include Health Care and Dependent Care (child care). The provisions are optional, and an employer is not required to adopt them. However, Penn State is pleased to implement the following changes, effective through Dec. 31, 2020. 

Employer-sponsored health coverage

Employee may: 

  • Make a new election if they initially declined to enroll in a Penn State health care plan for 2020
  • Cancel an existing health plan election for 2020

Log in to Workday to make these changes

Health Care FSAs

Employee may: 

  • Make a new election if they initially declined to enroll for 2020
  • Increase an existing election up to the IRS maximum of $2,700 for 2020

Log in to Workday to make these changes

Dependent Care (Childcare) FSAs

Employee may: 

  • Revoke an existing election for 2020
  • Make a new election if the employee initially declined to enroll for 2020
  • Increase an existing election up to the IRS maximum of $5,000 per family for 2020
  • Decrease an existing election

Log in to Workday to make these changes

Extended Claims Substantiation Periods for Health Care & Dependent Care (Child Care) FSAs:

Health Care FSA: 

  • The 2019 Health Care FSA deadline to submit expenses will be extended to Dec. 31, 2020
  • For 2021, the annual rollover amount will be increased to $550 for funds not used for 2020 services
    • Please note only those employees who re-enroll in the Health Care FSA for 2021 will be eligible to receive a rollover from 2020, up to $550, which can then be used for services in 2021

Dependent Care (Child Care) FSA: 

  • For employees enrolled in benefits for 2019, the grace period which will allow employees to incur expenses is now Dec. 31, 2020, provided there are funds remaining in the 2019 account
  • The deadline to submit expenses for 2019 and 2020 will be March 31, 2021

Questions regarding Health Care or Dependent Care (child care) FSA’s should be directed to HealthEquity at 866-346-5800. Questions regarding making changes in Workday should be directed to HR Services at 814-865-1473.     

Last Updated July 23, 2020