Cheat Sheet: Know the COVID Provisions That are Ending
Cheat Sheet: Know the COVID Provisions That are Ending
The impact of COVID has brought many changes to your life; it can feel all-encompassing. As you’ve adjusted and readjusted to pandemic-related happenings, it’s now important to prepare for yet another shift that impacts your benefits administration.
Certain pandemic-related rules are beginning to phase out as we start moving back to pre-COVID norms. Here’s a quick review of what you need to know.
Mid-year Election Changes Reverting to Pre-COVID Guidelines
Under normal circumstances, participants are permitted to make mid-year election changes when the participant experiences a change in status such as getting married, getting divorced, or having a child. While COVID relief regulations had relaxed the rules for mid-year changes for plan years ending in the 2020 and 2021 plan years, Flexible Spending Accounts (FSAs) and major medical plans will now be returning to follow the pre-COVID rules.
For plan years ending in 2020 or 2021, no status changing event was required. As mid-year rules revert to normal guidelines, you will once again be restricted to “change in status” life events.
Health FSA Grace Periods No Longer Extended
Healthcare FSA grace periods will also revert to pre-pandemic rules. This means there will no longer be an extended grace period of 12 months. It is important that you remind your employees that these grace periods will return to normal for the 2022 plan year, meaning a grace period of no longer than two and a half months.
Healthcare FSA Carryovers No Longer Unlimited
For the 2020 and 2021 plan years, unlimited Healthcare FSA carryovers were permitted from the 2020 plan year to 2021 and from the 2021 plan year to 2022. Beginning with the 2022 plan year, employers’ options to offer a carryover will once again be limited to a maximum of $550 (adjusted yearly for inflation). But, keep in mind that employers can choose to include a grace period, a carry over, or neither. An employer cannot have both a grace period and a carry over.
Carryovers, grace periods, and runoff periods - what are the differences?
Changes to Dependent Care Accounts
Pandemic-influenced Dependent Care Accounts (DCAs) adjustments will also revert to normal. Beginning in the 2022 plan year, carryover provisions will no longer be available for these programs. Keep in mind that the rise of maximum amounts an individual or married couple filing jointly could contribute will also be lowered. Instead of the maximum amount of $10,500 joint or $5,250 (for married individuals filing separate tax returns), limits will revert to the pre-COVID contribution limits of $5,000 and $2,500. Also note that for plan year 2022, only claims for children up to the age of 13 can be reimbursed going forward. COVID relief temporarily changed the maximum age participants could submit claims for children from age 13 to 14 for the 2020 plan year and for carryover amounts into the 2021 plan year.
|
|
COVID Relief Ending in 2021 |
2022 Return to Norm |
|
Family contribution limit |
$10,500 |
$5,000 |
|
Individual contribution limit |
$5,250 |
$2,500 |
|
Dependent child age |
14 |
13 |
HSA Deduction Carve Out Expiring
Typically, to be able to make contributions to a Health Savings Account (HSA), enrollees in a qualified High Deductible Health Plan (HDHP) cannot have additional coverage that pays claims before they’ve met their deductible under the plan. The Coronavirus Aid, Response and Economic Security (CARES) Act of 2020 temporarily allowed qualified HDHPs to cover telehealth services before plan enrollees reached their deductible. On December 31, 2021, this provision will expire. While this provision is expiring, keep in mind that other changes made by the CARES Act are remaining permanent. Employees can continue to use HSA, HRA, or FSA funds to pay for over-the-counter medications without a prescription and menstrual products.
Over-the-Counter Items & Menstrual Products Now Eligible for Reimbursement
If your plan year is approaching, remember to plan for these changes and ensure you and your employees are up to date on these sunsetting provisions.
Looking for other ways to prepare for open enrollment? Here's a quick checklist to help.
This blog is up to date as of August 2021 and has not been updated for changes in the law, administration or current events.