IRS Guidelines for the Consolidated Appropriations Act (CAA) 2021 and the American Rescue Plan Act (ARPA) 2021

Employers offering health  FSAs  and dependent care  FSAs (DCAs) may allow (but are not required to allow) any remaining balances at the end of plan years ending in  2020  and  2021  to roll into the following plan year.

Employers offering health and  DCAs  may extend (but are not required to extend) grace periods for up to  12  months for plan years ending in 2020 and 2021.

Employers offering 2021 DCAs may increase (but are not required to increase) the annual maximum  to $10,500.

Employers offering  2021 DCAs  may allow (but are not required to allow) a one-time  election change without  qualified life event.

Employers offering health  FSAs  may allow (but are not required to allow) employees who terminate during  2020  or 2021  to spend down unspent balances through the end of the plan year. This is similar to what is already permitted for  DCAs.

Employers offering dependent care  FSAs  may extend (but are not required to extend) the age limit for qualifying children from  13  to  14  for a plan year for which open enrollment ended before January  312020, and for any unspent funds from that plan year that are available (either by rollover or grace period) to the employee during the following plan year.

Zenefits will provide a link to a page in the Section  125  portion of the Compliance link on the Company page within the Benefits Application.

The Company Admin will download a plan amendment template, fill out and sign it, and then upload it to the web (similar to the process executed for IRS  2020-29) for processing. To complete this process click the Benefits Administration App on your home page, navigate to the Company page from your main header, and select the Compliance link on the left hand menu. Once you have entered the Compliance page, you will find your plan amendment template in the Section 125  tile at the top of the page. Download the amendment, select any options (you may elect to choose any or all options available to you based on your current plan design) you would like, sign the document and upload it for processing.

Once the signed document is uploaded, it will be sent to the the Zenefits Ops team for processing.

The Ops team will review the plan amendment to ensure the changes requested are in line with all requirements, and then will process the changes to your company setup. Once the plan changes have been made, they will be automatically sent to the processing system to update balances as necessary.

After all changes have been made in the processing system, you will receive a communication confirming completion of the request and they will be reflected accordingly in the Benefits Application and Mobile App.

Healthcare FSA

  • With the new 2021 CAA changes to allow for a full balance rollover, the Zenefits Carryover max can now be configured between $1 and $2750 ( 2021  plan max). 
  • The provision to extend the benefit to terminated employees, allowing them to spend down their remaining balance will be supported.

Dependent Care  FSA

  • With the new 2021 CAA  changes to the 2020 Dependent Care FSA to allow for a full balance rollover, the Zenefits Carryover max can now be configured between $1 and $5000 (2020  plan max). 
  • With the new 2021 ARPA  changes to the Dependent Care FSA  annual max, Zenefits will support a $10,500  maximum for the 2021 plan year.
  • With the new 2021 CAA  changes to allow for a full balance rollover, the Zenefits Carryover max can now be configured between $1 and $10,500 (2021  plan max). 
  • Zenefits will support a one-time  election change to the 2021 Dependent Care FSA  without a qualified life event.
  • With the new 2021 CAA  changes to allow for an employer to extend their Grace Period to 12  months , the Zenefits Grace Period Extension can now be configured at 2 ½ months or  12  months . 
  • We will offer and support the processing change to the age limit for qualifying children from 13  to  14  for a plan year for which open enrollment ended before January 31, 2020,  and for any unspent funds from that plan year that are available (either by rollover or grace period) to the employee during the following plan year.

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