The Internal Revenue Service issued guidance Tuesday to make temporary changes to section 125 cafeteria plans, with the goal of providing tax relief and flexibility in the midst of the novel coronavirus pandemic. The IRS is extending the claims period for health care flexible spending arrangements and dependent care assistance programs and enabling taxpayers to make mid-year changes to their accounts.
The guidance released Tuesday by the IRS deals with the unanticipated changes in expenses faced by many taxpayers as a result of the COVID-19 pandemic. The IRS is now allowing its previously provided temporary relief for high deductible health plans to be applied retroactively to Jan. 1, 2020, and also increases for inflation the $500 permitted carryover amount for health FSAs to $550.
Loren Brockhouse is Chief Revenue Officer of iPipeline where he brings extensive experience in sales leadership, revenue strategy, and building high-performing teams across the legal-tech and fintech sectors.
In his role as CRO, Brockhouse oversees all aspects of revenue generation, including sales, marketing, and revenue operations, with a focus on creating scalable systems that drive predictable growth. He is passionate about fostering a collaborative, customer-centric culture that ensures exceptional experiences for carriers, distributors, and advisors.
Brockhouse joined iPipeline from BigHand, a legal technology provider, where he served as Chief Revenue Officer and led global go-to-market strategies. Prior to that, he held senior leadership roles at PrimePay, Vanco, and Businessolver, where he delivered sustainable revenue growth and strengthened operational frameworks.
Heather Zack is an SVP, Private Client Services for Carson Group, a wealth advisory firm with over $60 billion in assets under management.
In Notice 2020-29, the IRS is offering extra flexibility to taxpayers by:
- extending the claims periods for taxpayers to apply unused amounts remaining in a health FSA or dependent care assistance program for expenses incurred for those same qualified benefits through Dec. 31, 2020;
- expanding the ability of taxpayers to make mid-year elections for health coverage, health FSAs and dependent care assistance programs, allowing them to respond to changes in needs as a result of the COVID-19 pandemic; and
- applying earlier relief for high-deductible health plans to cover expenses related to COVID-19, and a temporary exemption for telehealth services retroactively to Jan. 1, 2020.
In conjunction with that notice, the IRS also issued Notice 2020-33, in response to the Trump administration’s Executive Order 13877, which directs the Treasury secretary to “issue guidance to increase the amount of funds that can carry over without penalty at the end of the year for flexible spending arrangements.” The notice ups the limit for unused health FSA carryover amounts from $500, to a maximum of $550, adjusted each year for inflation.
