Ch-Ch-Ch-Changes (In Elections And Grace Periods)

The IRS released two Notices this week related to cafeteria plans and flexible spending arrangements ("FSAs").  Notice 2020-29 provides relief for cafeteria plans in response to the current COVID-19 pandemic, and Notice 2020-33 provides a permanent increase to the carryover limit for health FSAs.

Due to the COVID-19 pandemic, many employees' reasonable expectations when they made their coverage elections for this year have significantly changed.  For example, an employee may have waived health coverage for a child and now realized the child needs coverage.  Or, the employee may incur much less in medical and dependent care expenses this year because doctor, dentist, eye doctors' offices and childcare centers have been closed for months.  On the other hand, an employee may have incurred much more in medical and dependent care expenses because he or she had COVID-19 or needed childcare because of school closures.  Notice 2020-29 provides, among other things, some