Updates to tax-advantaged accounts

The following updates have been made to tax-advantaged accounts, including flexible spending accounts (FSAs) and health savings accounts (HSAs) as a result of government guidance and legislation passed in response to the COVID-19 crisis.

U.S. government guidance

Personal protective equipment (PPE)

The IRS added personal protective equipment (PPE), such as masks, hand sanitizer, and sanitizing wipes to the list of eligible expenses for healthcare FSAs and HSAs if purchased for the primary purpose of preventing the spread of COVID-19, for the personal use of you and your family.

This applies to expenses dating back to January 1, 2020. While your debit card should work for new eligible expenses, you can submit old or new eligible expenses online at hellofurther.com or by calling Further Member Services at 800-859-2144. If a claim was previously denied, you can submit the expense as a new claim.

HSA contribution and filing extensions

Because the IRS moved this year’s federal tax return filing deadline to May 17, 2021, you also have until then to make contributions to — or excess contribution withdrawals from — your HSA for 2020.

Additionally, in Texas, Oklahoma, and Louisiana — because they were affected by severe winter storms — residents have until June 15, 2021, to make those contributions and withdrawals for 2020.

Deadlines for FSA claims extended

The Department of Labor (DOL) released guidance that generally extended the deadline for when 2020 FSA claims need to be filed. Claims that previously needed to be filed by March 31, 2021, now must be filed by March 31, 2022.

If you submit claims beyond the revised filing date, you will receive a Claims Denied Explanation of Payment (EOP) either through the mail or by email.

American Rescue Plan Act

The American Rescue Plan Act (ARPA) raises the annual limits for pretax contributions to dependent care FSAs in 2021 only. This means dependent care FSA participants may be able to contribute more to their accounts on a tax-advantaged basis to pay for eligible expenses. This change does not affect healthcare FSAs.

The limit raises contributions to the following levels:

  • Single taxpayers and married couples filing jointly can now contribute up to $10,500 (up from $5,000).
  • Married individuals filing separately can now contribute up to $5,250 (up from $2,500).

With this change, all employees with a dependent care FSA through the Board of Pensions may be able to change the amount they have elected to set aside in 2021, going forward, even if they do not have a qualifying life event. Changes to the elected amount in 2021 cannot be less than the amount already contributed.

Read a summary of the complete provisions of ARPA.

The Consolidated Appropriations Act, 2021

The Consolidated Appropriations Act, 2021 — signed into law December 2020 — has temporarily increased the flexibility of FSAs for 2020 and 2021. Employees with FSAs through the Board of Pensions may be able to take advantage of at least one provision of the law: the ability to use money in their FSAs that they normally would have lost (forfeited) at the end of the year.

All employees with a healthcare or dependent care FSA through the Board of Pensions

  • can continue to use the money in 2020 and 2021 FSAs through December 31, 2022 (except for dependent care, as described below); and
  • may be able to change the amount they have elected to set aside in 2021, going forward, even if they don't have a qualifying life event. Changes to the elected amount in 2021 cannot be less than the amount contributed; and for healthcare FSAs, it also cannot be less than the amount already reimbursed.

In addition, all employees with a dependent care FSA through the Board of Pensions who have children who turned 13 in 2020 can continue to use dependent care FSA money for those children through 2021, provided those funds are used by December 31, 2021; the exception applies for contributions in 2020 only.

The CARES Act

The Coronavirus Aid, Relief, and Economic Security (CARES) Act removes the requirement that over-the-counter drugs must be prescribed by a physician to be eligible for reimbursement from a healthcare FSA or health savings account. If you have one of these accounts, you may use money in your account to pay for over-the-counter drugs purchased on or after January 1, 2020.

Dependent care FSAs

If, as a result of the pandemic, you are not working, or working fewer hours, or if your care provider/costs change, these qualify as permissible reasons, under current IRS rules, to change your dependent care FSA election.