This article was last updated on 4-2-20 at 11 am.
Flex Spending Account (FSA and Limited FSA) Election Changes
Here is the most up-to-date information on Flex Spending Account (FSA and Limited FSA) Election Changes relating to COVID-19 epidemic.
Furloughed Employees
- If hours are reduced and eligibility for the plan is lost, FSA deductions will cease.
- COBRA may be available to continue on the plan (See COBRA section below). If COBRA is elected, participant is eligible to submit medical expenses incurred through the COBRA period. COBRA payments can continue to be made through pre-tax deductions.
- If no COBRA is elected, claims incurred up to date of eligibility loss can be submitted for reimbursement via paper claim.
- If hours resume to make employee eligible for the plan again within 30 days, employee will step back into original FSA election and the same payroll deductions will resume.
- Any medical expenses incurred during the “ineligible” period will not be reimbursable (unless COBRA is elected).
- If there is a reduction in hours, but the employee is still benefit eligible, no FSA change available.
FLMA Leave
- May revoke election or continue.
- 3 options to pay for FSA coverage if continuing:
- Prepay FSA Deductions
- Pay-as-you go (pre-tax deductions or post-tax payment)
- Catch-up when return to work
- If electing to continue, original election is available for reimbursement.
- If electing to revoke election upon FMLA, any claims incurred during the FMLA period will not be reimbursed.
- Upon return to work from FMLA, employee may either:
- Have original election continue, provided employee pays missed contributions.
- Provide a “change in election” form for the remainder of the plan year.
Temporary Lay Off
- FSA Deductions will cease.
- Debit card will be inactivated.
- Claims incurred up to date of lay off can be submitted for reimbursement via paper claim.
- Claims incurred after date of lay off are not reimbursable.
- If employee is re-hired within 30 days, he/she will step back into original FSA election
and prior payroll deductions will resume. - Any medical expenses incurred during the lay off period will not be reimbursable.
- If re-hired after 30 days, employee will be treated as a “new hire” and will be eligible to make a new election for the remaining period of the plan year.
Permanent Lay Off
- FSA Deductions will cease.
- Debit card will be inactivated.
- Claims incurred up to date of lay off can be submitted for reimbursement via paper claim.
FSA and COBRA
- If company employs 20 or more individuals, COBRA applies.
- If employee falls under any of the categories listed above, he/she has the option of electing COBRA for FSA or Limited FSA Account.
- COBRA for FSA would be paid on a post-tax basis.
- Claims for medical expenses incurred through the COBRA period can be reimbursed.
FSA and COVID-19 Medical Expenses
- FSA cannot be increased due to an increase in medical expenses related to COVID-19.
Dependent Care Assistance Program (DCAP) Election Changes
Furloughed Employee
- Election can be changed to account for child being in daycare fewer hours.
Temporary Lay Off
- DCAP deductions will cease.
- Election can be changed or stopped for child not being in daycare.
Permanent Lay Off
- DCAP deductions will cease.
- Funds available to submit dependent care claims through the end of the plan year for any daycare expenses incurred during the plan year.
DCAP and COVID-19
- If your child’s school is closed due to COVID-19, and you (and your spouse, if applicable) must continue to work:
- You can increase or start a new DCAP election to cover the increased cost of dependent care.
- If your child’s school (or daycare center) is closed due to COVID-19, and you need to stay home to care for your child.
- You can decrease or stop your DCAP election to cover the decreased cost of dependent care.
Health Savings Account (HSA) Election Changes
- Employee can stop, start or change HSA deductions at any time by completing a “Change in Election Form” and submitting to employer.
- If employee stops HSA Election, he/she can continue to use HSA Account for family’s medical expenses now or in the future.
- If employee needs to get tested for the COVID-19 virus, his/her health insurance is now required to pay for the testing without meeting any deductible. This will not lose HSA status and he/she may continue to contribute to their HSA if still covered by a high-deductible health plan.
- The Government has extended the final deadline for making a 2019 HSA contribution, to July 15, 2020.
Health Reimbursement Arrangement (HRA) Changes
- If you are temporarily laid off or permanently laid off, you can submit claims for expenses incurred up to your date of lay off.
- You have the option of electing COBRA for your HRA. You must remain on your employer’s group health insurance to have this option. COBRA would need to be paid on a post-tax basis, and you could continue to submit medical expenses incurred through the COBRA period.
- If permanently returning to work, you will again be eligible for your employer’s HRA (as long as you continue on your employer’s group health insurance).
Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) Changes
- If you are temporarily laid off or permanently laid off, you can submit claims for expenses incurred up to your date of lay off.
- All contributions to your QSEHRA will cease.
- If permanently returning to work, you will again be eligible for your QSEHRA.
