HUMAN RESOURCES | At the end of December 2020, the “Consolidated Appropriations Act, 2021” was passed, and it included important changes to the rules governing Health Care and Dependent Care Flexible Spending Accounts. The changes affect plan years 2020, 2021, and 2022. Effective Jan. 1, 2021, changes impacting both the Health Care and Dependent Care FSAs can be found below.
Carryover of Unused Funds Increased
- Health Care FSA
The Health Care FSA allows you to pay for eligible medical expenses for you and your eligible family members. For 2021, you may contribute a maximum of $2,750. If both you and your spouse are LMU employees, you may each contribute up to $2,750.
New COVID-19 relief provisions allow you to carry over additional funds, as follows
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- 2020 to 2021: All unused Health Care FSA funds in your account will be carried over from the current plan year into the subsequent plan year (not limited to $550 as announced last year). This applies for plan years ending in 2020 (allowing carryover into 2021).
- You have until December 31, 2021 (or until your fund amount is depleted) to submit claims.
- 2021 to 2022: All unused Health Care FSA funds in your account will be carried over from the current plan year into the subsequent plan year (not limited to $550 as announced last year). This applies for plan years ending in 2021 (allowing carryover into 2022). This may include amounts from the 2020 plan year that went unused in 2021.
- Your remaining 2020 balance will appear in your 2020 plan year account until the end of the COVID-19 pandemic (Outbreak Period).
- Your 2021 balance will appear in your 2021 plan year account.
- You can access both accounts using the same login.
- The carryover amount does not count against your Health Care FSA election for the following plan year. You may still elect the maximum of $2,750 per plan year.
How will claims be paid?
If you re-enrolled for 2021:
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- For 2021 dates of service, 2021 funds will be used first. Once 2021 funds have been spent, 2020 funds will be used.
- For 2020 dates of service, claims should be submitted using Pay Me Back or Pay My Provider.
- 15 days after the run-out period ends, any remaining 2020 funds will be moved to your 2021 account and can only be used for 2021 dates of service.
If you did not re-enroll for 2021:
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- You can still use your 2020 balance for 2021 dates of service. You will see a $0 2021 election amount reflected in your account.
The carryover from plan year 2022 to plan year 2023 will once again be limited to $550.
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- Online Account for first-time users, please register for online access.
- Mobile App – View your account on your mobile phone, take a picture of your receipt, and file your claim.
- Dependent Care FSA
The Dependent Care FSA allows you to pay for eligible expenses for care of your child and adult care expenses.
New COVID-19 relief provisions allow you to carry over additional funds, as follows:
2020 to 2021: All unused Dependent Care FSA funds in your account will be carried over from the current plan year into the subsequent plan year (not limited to the two and a half months grace period as announced last year). This applies for plan years ending in 2020 (allowing carryover into 2021).
2021 to 2022: All unused Dependent Care FSA funds in your account will be carried over from the current plan year into the subsequent plan year (not limited to the two and a half months grace period as announced last year). This applies for plan years ending in 2021 (allowing carryover into 2022). This may include amounts from the 2020 plan year that went unused in 2021.
The carryover amount does not count against your Dependent Care FSA election for the following plan year. You may still elect the maximum of $5,000 per plan year. You can contribute a maximum of $2,500 annually to a Dependent Care FSA if you are married but file separate tax returns.
Increase in Maximum Age of Eligible Dependents
Under usual Dependent Care FSA rules, a child’s expenses are eligible up to the age of 13. As part of this relief package, a child’s expenses will be eligible up to age 14. In order to qualify, you must have been enrolled in Dependent Care in 2020 and have a dependent child who turns 13 during 2020 or 2021.
Because this change only applies to plan year 2020, if you have a dependent who turned age 14 during 2020, you’ll be allowed to submit eligible expenses that were incurred in 2020 through December 31, 2021.
Changing your Health Care FSA and Dependent Care FSA elections
This will allow the plan’s eligible and/or enrolled members to make election changes for both Health Care FSA and Dependent Care FSA contribution amounts for plan years ending in 2021, regardless of existing change in status rules.
Mid-year election changes begin on August 2, 2021 and end on August 13, 2021 at 5 p.m.
Eligible employees will be allowed to modify their FSA plan year 2021 elections as follows:
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- Cancel your 2021 participation
- Make a new election for 2021
- Change your 2021 election
Important Notes
Participants can make a decrease in their FSA election but cannot receive a refund. IRS rules continue to prohibit refunds of employee contributions. If an employee elects to decrease the annual election amount, the new election cannot be lower than:
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- The amounts deducted year-to-date
- The amount already reimbursed for claims in 2021
- If you cancel participation in the FSA, you may not file claims for services incurred after the cancellation. If you would like to stop contributions for the remainder of the year but continue to incur eligible expenses, you can instead reduce your annual election to the amount you’ve already contributed
- For members that were enrolled in Health Care FSA in 2020 and selected the Bank of America Health Savings Plan in 2021, we encourage you to spend down your Health Care FSA by December 31, 2021 if you plan on enrolling in the Bank of America Health Savings Plan for 2022.
- For members that are enrolled in Health Care FSA for 2021, in order to be eligible for the Bank of America Health Savings Account effective January 1, 2022, you will need to spend down your entire Health Care FSA balance (2021 and carryover) by December 31, 2021.
To make changes to your contribution amount or to enroll please contact LMU Benefits at 310.338.5757 or call LMU Human Resources at 310.338.2723.
Human Resources shares these FAQ’s to provide more information. Please contact Human Resources at hr@lmu.edu with any additional questions.
