Introducing ALEXJuly 22, 2020
10 Most Common Types of Employee BenefitsDecember 1, 2020
BENEFITS NEWS YOU NEED TO KNOW!
WHAT: IRS temporarily relaxes Section 125 rules
WHY: Response to ease employee liabilities and concerns during COVID-19 event
WHEN: May 12, 2020
Notice 2020-29 allows employers to adopt one or more changes to existing cafeteria plans for the 2020 plan year:
- An employee who did not elect group health plan coverage before the beginning of the current plan year may now elect to be covered for the rest of the plan year.
- An employee who did elect group health plan coverage before the beginning of the plan year may now elect different health plan coverage for the balance of the year.
- An employee who did elect group health plan coverage may revoke their election for the rest of the plan year if they enroll in other coverage such as under their spouse, parent, or via an exchange plan.
- An employee may revoke their FSA election, make a new FSA election, or vary their FSA election amount for the rest of the plan year.
- An employee may revoke their dependent care assistance plan (DCAP) election, make a new DCAP election, or vary their DCAP election amount for the rest of the plan year.
- The grace period for a health FSA or DCAP balance that ended in 2020 may be extended to 12/31/2020, thus in most cases potentially restoring what were otherwise forfeitures of health FSA and DCAP credit balances carried forward from 2019.
Please note that there are additional parameters that apply to an employer’s election of these allowed changes, including requiring plan amendments and SMM distribution. Overall, these are very timely and valuable changes that should ease both the financial and administrative burdens brought on by the COVID-19 event.