Update to Penn State employees' Flex Spending Accounts in response to COVID-19

February 26, 2021

UNIVERSITY PARK, Pa.As was noted in a previous Penn State Today article, posted on Feb. 9, the Consolidated Appropriations Act, 2021 was enacted on Dec. 27, 2020. The legislation permits employers to allow employees more flexibility in how they utilize unused 2020 and 2021 Health Care and Dependent Care Flexible Spending Account (FSA) monies previously elected for qualifying medical and dependent care expenses under the employer’s plan. All the FSA provisions of the Act are optional. Additional clarification by the IRS was recently published and as a result, Penn State will be offering previously announced allowable changes, as well as those noted below as Recent Updates, to our employees.

Health Care FSAs

  • Carryover ALL unused 2020 funds into 2021 for those who made a Health Care FSA election during Benefits Open Enrollment 2021.
    • Previous carryover limit was $550.
  • Recent Update: ENROLL in the Health Care FSA without a qualifying event on a PROSPECTIVE basis, not retroactive to Jan. 1, 2021.
  • Prospectively MODIFY the elected amount without a qualifying status change.
    • Modify means increase to the IRS maximum limit ($2,750) or decrease no lower than the amount already spent from the account.
  • Carryover ALL unused 2021 funds into 2022 (with Health Care FSA election during Benefits Open Enrollment 2022).

Dependent Care (Child Care) FSAs 

  • Carryover ALL unused 2020 funds into 2021 for those who made a Dependent Care FSA election during Benefits Open Enrollment 2021.
    • This is the first time the IRS has permitted carryover for Dependent Care FSAs.
  • Recent Update:  ENROLL in the Dependent Care FSA without a qualifying event on a PROSPECTIVE basis, not retroactive to Jan. 1, 2021.
  • Prospectively MODIFY the elected amount without a qualifying status change.
    • Modify means increase to the IRS maximum limit ($5,000) or decrease no lower than the amount already spent from the account.
  • Be reimbursed for expenses for an eligible dependent who is not yet age 14 (previously age 13).
  • Carryover ALL unused 2021 funds into 2022 (with Dependent Care FSA election during Benefits Open Enrollment 2022).

Extended Claims Substantiation Periods for Health Care & Dependent Care (Child Care) FSA’s:

Health Care FSA: 

  • The 2019 Health Care FSA deadline to submit expenses has been extended to March 31, 2021.  
  • The 2020 Health Care FSA deadline to submit expenses is March 31, 2021

Dependent Care (Child Care) FSA: 

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

Penn State employees with questions may contact HR Services at 814-865-1473 or through WorkLion.psu.edu.

 

Last Updated February 26, 2021