The following changes have been made to flexible spending accounts due to COVID-19.
Medical Spending Account (MSA) and Limited-use Medical Spending Account (Limited-use
The maximum carryover amount for plan years 2020 and 2021 have increased from $550 to the full amount of unused funds.
- 2020 participants: If you participated in an MSA in 2020, you can carry over the full amount of unused funds remaining after the reimbursement deadline into the 2021 plan year.
- 2021 participants: If you participate in an MSA in 2021, you can carry over the full amount of unused funds remaining after the reimbursement deadline into the 2022 plan year.
Dependent Care Spending Account (DCSA)
DCSA Contribution Limits
The contribution limits for the 2021 plan year have increased to the following:
|Tax Filing Status||New Limit|
|Married, filing separately||$5,250|
|Single, head of household||$10,500|
|Married, filing jointly||$10,500|
DCSA Grace Period
The grace period for plan years 2020 and 2021 have extended from March 15 to December 31 of each following year.
- 2020 participants: If you participated in a DCSA in 2020, you can continue to incur expenses through December 31, 2021, and submit claims for reimbursement using your 2020 funds by March 31, 2022. You will forfeit 2020 funds left in your account after the reimbursement deadline.
- 2021 participants: If you participate in a DCSA in 2021, you can continue to incur expenses through December 31, 2022, and submit claims for reimbursement using your 2021 funds by March 31, 2023. You will forfeit 2021 funds left in your account after the reimbursement deadline.
DCSA Cap for Highly Compensated Employees
In 2021, the Dependent Care Spending Account (DCSA) is capped at $1,700 for highly compensated employees. An employee who earns more than $130,000 in 2021 is defined as a highly compensated employee. The recent DSCA contribution increase to $10,500 did not change the cap for highly compensated employees in 2021. If you are enrolled in a DCSA and earn more than $130,000 per year, please complete an Active Notice of Election (NOE) form and return it to your campus Benefits Office as soon as possible but, no later than Monday, May 3, 2021 ,to avoid incorrect deductions.
DCSA Age Limit
The maximum age limit for eligible dependents in one limited circumstance has temporarily changed:
- You must have been enrolled in a DCSA for the 2020 plan year; and
- Your dependent child must have reached age 13 during 2020; and
- You must still have unused 2020 DCSA funds available.
If you meet all of these conditions, you may request reimbursement for any eligible dependent care expenses incurred January 1, 2020, through December 31, 2021, for that child until the child reaches age 14. If you do not meet all of the above conditions, the normal rule applies, which states you can seek reimbursement for eligible dependent care expenses for children until they reached age 13.
Prospective enrollment changes
PEBA is allowing employees to make certain prospective changes to MSAs, Limited-use MSAs and DCSAs without a qualifying change in status in 2021. You can make the following changes to your flexible spending accounts for plan year 2021:
- Make a new MSA, Limited-use MSA or DCSA election up to the maximum contribution limit.
- Increase your current MSA, Limited-use MSA or DCSA election up to the maximum contribution limit.
- Decrease your current MSA, Limited-use MSA or DCSA contributions. The decrease cannot be greater than the amount you have already contributed or been reimbursed. You cannot receive a refund of funds you have already contributed. Additionally, the $2.32 monthly administrative fee will still apply because your account is active.
- Stop future contributions to your MSA, Limited-use MSA or DCSA. You can stop contributions only if you have contributed more than the amount you have been reimbursed. Additionally, the $2.32 monthly administrative fee will still apply because your account is active.
To make a change, you should complete an Active Notice of Election (NOE) form and return it to the Benefits Office at firstname.lastname@example.org. Indicate “COVID” at the top of the NOE as the change reason. Your change will be effective the first of the month following when PEBA receives the completed NOE from your Benefits Administrator, and the change will affect your contributions going forward. You must submit an NOE by November 30, 2021.
View the COVID-19 summary for FSAs in 2021 document [pdf] for more details about these changes, or contact the Benefits Office at email@example.com or 803-777-6650.