Frequently Asked Questions
COVID-19's Effects on Your Pre-Tax Benefits
As we move through these unprecedented times with COVID-19 we have received many calls from clients and participants about how recent legislation and mandates affect your FSA's, Commuter benefits, and HSA's. In response, we have compiled the following list of Questions and Answers. Note that we are updating these online as additional regulations and guidance are released.
Flexible Spending Accounts
Dependent Care FSA
- I am required to work from home—can I decrease my DCFSA election?
Yes. You may reduce your per-pay deduction or drop it altogether while you are at home. When you return to the office full-time and care is again necessary, you can increase or start deductions again.
- I must still go to work, but I have had to change my daycare provider—can I change my DCFSA election?
Yes, if you had to find "emergency" daycare or change your provider altogether and this led to an increase or decrease in what you pay for the daycare, you may increase or decrease your election consistent with the change. If the cost of your daycare changes again for some reason, you may change your election accordingly.
- I must still go to work, but my child's school is closed and now I need daycare—can I change my DCFSA election?
Yes, since you have a new need for daycare, you can increase your election. Once schools re-open and you need for daycare changes, you may decrease your election accordingly. This also applies to employees who had not previously signed up for the DCFSA account—since they now have a need for daycare, they can make an election, and can also decrease or stop that election once schools re-open.
- What happens if I lose my job or am laid off—can I still get reimbursed?
Yes. You can still be reimbursed for eligible expenses that are incurred through the end of the current plan year (remember that daycare expenses are not eligible if you are not employed or actively seeking new employment), and you can submit claims through your employer's specific submission deadline.
- Can I be refunded for amounts that I have already put into my DCFSA account?
No. While the rules around changing Dependent Care elections are fairly lenient, the regulations that govern the account do not allow a refund.
Health Care FSA (HCFSA)
- What happens if lose my job or I'm temporarily laid off and my HCFSA election terminates?
You'll still be able to be reimbursed for expenses that you incurred prior to your termination date, and you can submit claims through your employer's specific submission deadline. Also, you may be eligible for COBRA continuation coverage.
- How does COBRA work for the HCFSA account—is it the same as continuing my medical insurance coverage?
The rules are different and being eligible to continue your medical coverage doesn’t necessarily mean that you are eligible to continue your HCFSA account. If you are notified that you are eligible to continue the HCFSA account, you would continue to contribute to the account, but on an after-tax basis. For each month that you pay the applicable “premium,” your account termination date will be extended to the end of that month, and you’d be able to incur expenses and get reimbursed. You would still have through your employer’s specific submission deadline to send in your claims.
- I or a family member have the virus, so my medical bills have increased—can I increase my HCFSA election?
Normally, an increase in expenses doesn’t qualify as a status change event that would allow you to change your election. However, recent regulations give employers the option to allow employees to change their elections in the absence of a status change (see question 5 below).
- I am experiencing a financial hardship due to the COVID-19 situation. Can I be refunded for amounts that I have already put into my HCFSA account?
No. But you can submit claims and get reimbursed for those amounts.
- Is there any way that I can change my original HCFSA election?
The most recent regulations–released May 12, 2020–give employers the option to allow employees to increase or decrease an existing election, or to make an election if they had not previously enrolled in the account. If an employer chooses to allow these changes, you may not reduce an election to less than what you have already contributed to the account (e.g. you can’t be refunded any amounts that have already been contributed), and the change is only allowed on a prospective basis.
Extended Deadlines / Plan Designs for FSAs
- Has the Grace Period for incurring claims been extended?
We’ve had several questions about whether there will be a retroactive extension of the March 15 maximum grace period. The relief granted under the initial COVID-19 regulations did not include any extension to the Grace Period. However, the most recent regulations–released May 12, 2020—give employers the option to extend the Grace Period for their particular plan (for both HCFSA and DCFSA). These regulations do not allow employers who previously did not have a Grace Period in their plan to add one now.
- Has there been any increase in the $500 HCFSA account carryover?
The relief granted under the initial COVID-19 regulations did not include any increase to the carryover amount. However, the most recent regulation—released May 12, 2020–give employers the option to increase the carryover amount to $550 for plan years beginning in 2020. These regulations do not allow the increase to the carryover amount for any prior plan year. Going forward, the maximum carryover will be an indexed amount based on the maximum HCFSA amount in place for the particular plan year.
- Will the claim submission deadline (run-out period) be extended to allow me more time to turn in my claims?
The regulations require that employers extend the claim run-out period for their HCFSA’s if the deadline occurs on or after March 1, 2020 (e.g. a 2019 plan that has a March 31, 2020 deadline). The extension is being implemented in our systems, and any claims that have been previously denied for missing the deadline will automatically be reprocessed. It is the employer’s option to also extend the DCFSA run-out period.
Health Savings Accounts
- When can I change my HSA election?
You can change your HSA election on a prospective monthly basis even absent the COVID-19 mandates. Note that you need to maintain coverage under a qualified High Deductible Health Plan to be eligible to continue contributions.
For periods of unpaid leave, when no pre-tax salary reductions are possible, you can suspend HSA contributions and resume when you return to active employment. Or you can make after-tax contributions to your HSA directly and deduct those contributions on your tax returns for that calendar year. Employees may generally contribute to their HSA’s until the tax filing deadline for the calendar year (April 15 of the year following the year for which the contribution is being made, but the IRS has announced that the deadline for making contributions to 2019 HSA’s has been extended to July 15, 2020).
- I’ve heard that my High Deductible Health Plan can cover testing and treatment services for COVID-19 outside the deductible—does that affect my eligibility for the HSA?
No. The IRS has indicated that employees who are otherwise eligible for the HSA will not be disqualified from HSA eligibility solely because a plan provides benefits for COVID-19 testing and treatment before the deductible is satisfied.
- I am required to work from home—will I lose the money I’ve already contributed?
No. Your balance will carry forward from month to month, but you must still submit your claims within 180 days (or by the claim run-out period after the end of a plan year).
- I am required to work from home—can I change my election for Parking or Transit benefits?
Yes. You can change your commuter elections on a prospective basis even absent the COVID-19 mandates. Since you have little or no parking or transit expenses while you are working from home, you can reduce or suspend your contributions until you return to work and then start them up again.
ThrivePass is not a law firm and does not provide legal advice. This is not a legal document, and all employers should check with their benefits attorney before taking any action.