In response to recent legislation and guidance from the Internal Revenue Service, the Office of Personnel Management has announced a one time, special enrollment period this summer for federal employees to increase or decrease their current elections for the Federal Flexible Spending Account Program (FSAFEDS).
The special enrollment period will be held from June 1, 2021 to June 30, 2021. It is to allow individuals who did not enroll or re-enroll for 2021 during Open Season the opportunity to enroll for 2021 and gain access to available 2020 carryover funds.
The Office of Personnel Management (OPM) has also published a benefits administration letter with information on the FSAFEDS flexibilities being offered for 2020 and 2021 under the American Rescue Plan Act.
Other relief benefits being provided to FSAFEDS participants include:
- The 2021 Dependent Care Flexible Spending Accounts (DCFSA) maximum election amount has been increased to $10,500 (or $5,250 for married taxpayers filing separately).
- FSAFEDS is allowing unlimited carryover for re-enrolled Health Care Flexible Spending Accounts (HCFSA) and Limited Expense Health Care Flexible Spending Accounts (LEX HCFSA) participants for the 2020 and 2021 plan years. If an employee does not re-enroll in 2021, they will not have access to 2020 carryover funds.
- FSAFEDS is extending the grace period for all DCFSA participants for the 2020 and 2021 plan years. The 2020 grace period is extended through December 31, 2021, and the 2021 grace period is extended through December 31, 2022. Participants who made an election to have a DCFSA for plan year 2020 normally would have until March 15, 2021 (the “grace period”) to incur eligible DCFSA expenses. Any funds not used during the grace period are normally forfeited. However, the new flexibilities allow an extension of this grace period in plan years 2020 and 2021. Specifically, participants who made an election to a DCFSA in plan year 2020 and who had funds remaining at the end of 2020 will now be allowed to use the remaining plan year 2020 funds to be reimbursed for eligible expenses incurred through December 31, 2021. Participants who have DCFSA funds remaining at the end of 2021 will now be allowed to use the remaining funds to be reimbursed for eligible expenses incurred through December 31, 2022.
Federal employees who have questions about the changes or how they apply to their personal situations should contact their agency’s local human resources office for guidance.