2021 Flexible Spending Accounts

Health Care Flexible Spending Account

If you elect the PPO Plan, you have the option to enroll in a Health Care Flexible Spending Account (FSA), managed through HealthEquity. Like the Health Savings Account (HSA), contributions made to the Health Care Flexible Spending Account are tax-free. However, unlike the HSA, funds contributed must be used in the same plan year for eligible health care expenses. For 2021, the contribution limit is $2,700. This election must be made during benefits open enrollment and cannot be changed, unless of a life-qualifying event. For those who elect a Health Care FSA, there is a carryover provision of up to $500.

Dependent Care Flexible Spending Account

Regardless of which health plan you choose, you can elect a Dependent Care FSA. This account can be used for dependent child expenses up to the age of 13. Once your child reaches age 13, they are no longer eligible. This account is used to reimburse you for dependent care expenses, such as child day care, elder care, etc. The contribution limits for 2021 are:

  • $5,000 per year per household
  • $2,500 for married individuals filing a separate tax return

In response to the COVID-19 pandemic, the IRS recently issued Notice 2020-29. The notice permits employers to offer greater flexibility to employees with respect to mid-year election changes for health care plans and Flexible Spending Accounts (FSA), which include Health Care and Dependent Care (Child Care).

Employer-sponsored health coverage – Employee may:

  • Make a new election if they initially declined to enroll in a Penn State health care plan for 2020
  • Cancel an existing health plan election for 2020

Health Care FSAs – Employee may:

  • Make a new election if they initially declined to enroll for 2020
  • Increase an existing election up to the IRS maximum of $2,700 for 2020

Dependent Care (Child Care) FSAs – Employee may:

  • Revoke an existing election for 2020
  • Make a new election if the employee initially declined to enroll for 2020
  • Increase an existing election up to the IRS maximum of $5,000 per family for 2020
  • Decrease an existing election

EXTENDED CLAIMS SUBSTANTIATION PERIODS FOR HEALTH CARE & DEPENDENT CARE (CHILD CARE) FSA’S:

Health Care FSA:

  • The 2019 Health Care FSA deadline to submit expenses will be extended to December 31, 2020
  • For 2021, the annual rollover amount will be increased to $550 for funds not used for 2020 services
    • Please note only those employees who re-enroll in the Health Care FSA for 2021 will be eligible to receive a rollover from 2020, up to $550, which can then be used for services in 2021

Dependent Care (Child Care) FSA:

  • For employees enrolled in benefits for 2019, the grace period which will allow employees to incur expenses is now December 31, 2020, provided there are funds remaining in the 2019 account.

The deadline to submit expenses for 2019 and 2020 will be March 31, 2021. HealthEquity CARES Act Flyer