We are here to support our clients, partners and employees now more than ever as we work together to stay healthy and protect ourselves and others. Below you will find resources related to your pre-tax plans and how they may be affected by COVID-19 and current legislation. If you have any questions, please do not hesitate to reach out to our team of dedicated account managers. We are ready to assist you.
Signed into law December 27, 2020
The new Consolidated Appropriations Act of 2021 was signed into law and includes several provisions that provide relief for your clients’ employees that participate in healthcare and/or dependent daycare flexible spending accounts. These provisions are not mandated and are at the discretion of the employer to enact. To make changes, an employer will need to amend their Plan Document and communicate any changes to employees.
In order to allow employees to use their remaining FSA account balances (for both healthcare and dependent daycare FSAs) for a plan year ending in 2020 and/or 2021, an additional 12 months after the end of the Plan Year may be permitted to submit claims for expenses incurred between the end of the Plan Year and 12 months post-Plan Year end.
Note: An extended period for Healthcare FSAs could affect the employee’s ability to make contributions to a Health Savings Account (HSA) during the next Plan Year.
In order to allow employees to use their remaining FSA account balances (for BOTH healthcare and dependent daycare FSAs) for a Plan Year ending in 2020 or 2021, participants may carryover unused funds, with no dollar limit, to a Plan Year ending in 2021 and/or 2022.
Employees are permitted to make prospective election changes for a Plan Year ending in 2021 regarding their Healthcare and/or Dependent Daycare FSAs. These changes may include revoking an existing election, making a new election, or decreasing / increasing an existing election to a Healthcare FSA or Dependent Daycare FSA on a prospective basis.
An employer may permit employees who ceased to participate in a Healthcare FSA during calendar year 2020 or 2021 to use their remaining balance through the end of the Plan Year in which participation ceased (including a grace period if applicable) without any regard to electing (or paying for) COBRA.
The new law provides that if a participant enrolled in a Dependent Daycare FSA had a child that turned age 13 in the 2020 Plan Year (more specifically, in the plan year for which the open enrollment period ended on or before January 31, 2020), then the participant may be reimbursed for expenses incurred after the child’s 13th birthday for the remainder of that plan year, or if there is an unused balance at plan year end, in the following year until the child turns age 14.
Released on May 12, 2020
The following is a summary of some of the provisions of IRS Notices 2020-29 and 2020-33 which were issued May 12, 2020. You will also be able to access the links to both notices so that you can review the entire content included in the Notices here: IRS Notice 20-29 and IRS Notice 20-33 .
Signed on March 27, 2020
Supplemental Funds Signed on April 24, 2020
Key Provisions:
The CARES Act provides for Economic Impact Payments to American households of up to $1,200 per adult for individuals whose adjusted gross income was less than $99,000 (or $198,000 for joint filers) and $500 per child under 17 years of age, up to $3,400 for a family of four.
Payments are currently in the process of being distributed to eligible individuals.
In response to the Coronavirus (COVID-19) pandemic, small business owners in all U.S. states, Washington D.C., and territories are eligible to apply for an Economic Injury Disaster Loan advance of up to $10,000. The SBA’s Economic Injury Disaster Loan program provides small businesses with working capital loans of up to $2 million that can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing.
The loan advance will provide economic relief to businesses that are currently experiencing a temporary loss of revenue. This loan advance will not have to be repaid.
SBA is unable to accept new applications at this time for the Economic Injury Disaster Loan (EIDL)-COVID-19 related assistance program (including EIDL Advances) based on available appropriations funding.
Applicants who have already submitted their applications will continue to be processed on a first-come, first-served basis.
The CARES Act established the Coronavirus Relief Fund (the “Fund”) and appropriated $150 billion to the Fund. Under the CARES Act, the Fund is to be used to make payments for specified uses to States and certain local governments; the District of Columbia and U.S. Territories (consisting of the Commonwealth of Puerto Rico, the United States Virgin Islands, Guam, American Samoa, and the Commonwealth of the Northern Mariana Islands); and Tribal governments. The CARES Act provides that payments from the Fund may only be used to cover costs that:
Employers of all sizes who are forced to close or suffer economic hardship due to COVID-19 are eligible to receive a refundable tax credit against payroll taxes for 50% of wages paid, up to $10,000 per employee. Qualifying employers must fall into one of two categories:
In order for employers to better maintain operations and payroll, employers and self-employed individuals can defer paying the employer share of Social Security tax they are otherwise responsible for paying for taxes imposed upon the Employer between now and the end of 2020. One-half of the amount borrowed must be repaid by December 31, 2021 with the balance having to be repaid no later than December 31, 2022. There is no interest imposed on the amount of the loan. If the Employer receives a loan under the Paycheck Protection Program, taxes imposed between the date of the loan and December 31, 2020 will not be eligible for the payroll tax deferral program.
Signed on March 18, 2020
Key Provisions:
Signed on March 6, 2020
Key Provisions:
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