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ARTICLE · 22 JANUARY 2021

Flexible Spending Account Changes: Increased Flexibility For Elections And Use Of Funds

Varnum LLP
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The 2021 Consolidated Appropriations Act, signed into law on December 27, 2020, gives employers the option to significantly increase the flexibility of employees' health and dependent care...

United StatesEmployment and HR
John D. Arendshorst
John D. Arendshorst

The 2021 Consolidated Appropriations Act, signed into law on December 27, 2020, gives employers the option to significantly increase the flexibility of employees' health and dependent care flexible spending accounts (FSAs). These changes were prompted by the COVID-19 pandemic, as many health care providers have limited access to routine treatments and many child care services have been suspended, potentially leaving FSA funds unused.

  • Unlimited carry-overs:  Employers may allow participants to carry over 100 percent of the unused amounts in their health and dependent care FSAs from 2020 to 2021, and from 2021 to 2022. Normally, the carry-over amount is limited to $550 for health FSAs, and carry-overs are not permitted for dependent care FSAs.

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