COVID-19 relief: Changes to SEBB Medical FSA and DCAP rules
We know 2020 probably didn’t go as planned. That’s why we’re offering extra flexibility with 2020 and 2021 Medical Flexible Spending Arrangement (FSA) and Dependent Care Assistance Program (DCAP) funds. These changes are allowed under the federal COVID-19 relief bill that passed in December 2020. They apply through December 31, 2021.
Make 2021 election changes with no qualifying event
If you enrolled in a Medical FSA or DCAP for 2021, you can change your elections without a qualifying event. This opportunity is available in June and September 2021. To make an election change, submit the Change in Status form to your payroll or benefits office during these months. Normal election minimums and maximums still apply.
You can now increase your 2021 DCAP election to the new, temporary maximum of $10,500 for a single person or married couple filing jointly (or $5,250 for married couples filing separately).
Payroll deduction changes are effective the following month.
- Changes submitted in March are effective in April.
- Changes submitted in June are effective in July.
- Changes submitted in September are effective in October.
If you lower your election, you can only lower it to the amount you have already contributed or claimed for the year. For example, if you elected $2,000 for your Medical FSA and you have already contributed or claimed $400, you can lower your election only to $400. The minimum annual election for both Medical FSA and DCAP is $240.
If you raise your election, the maximum annual contribution for a Medical FSA is $2,750. You can now increase your 2021 DCAP election to the new maximum annual contribution of:
- $10,500 annually for a single person or married couple filing a joint income tax return.
- $5,250 annually for each married participant who files a separate income tax return.
These opportunities only allow you to change your 2021 annual elections. You cannot make any other changes, like enrolling in Medical FSA or DCAP, without a qualifying event. If you want to make a change outside of June or September, you must have a qualifying event that creates a special open enrollment.
Flexibility with 2020 DCAP funds
You may continue to incur expenses and submit claims against your 2020 DCAP funds through December 31, 2021 — giving you an extra 12 months to spend your funds. You can also spend 2020 funds on children up to when they turn age 14. (The normal limit is children up to age 13.)
The 12-month grace period does not apply to Medical FSA funds.
Spend Medical FSA funds after you leave employment
You may use unspent 2020 or 2021 Medical FSA funds after you leave employment, without enrolling in SEBB Continuation Coverage (COBRA). If you left a job in 2020, or plan to do so in 2021, you can continue to incur expenses and submit claims for reimbursement through the end of the plan year in which you left employment, including the grace period.
For example, if you left work in October 2020, you have through March 2021 to incur eligible expenses and submit claims against your 2020 funds. See below to learn more about the Medical FSA grace period. All requirements for submitting claims and documentation still apply. Please note that your debit card will not work once you leave employment.