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.
Nancy Germond, MA, ARM, AIC, ITP, SPHR, SHRM-SCP, is Executive Director, Risk Management and Education, for Big 'I' national.
Nancy is a second-generation insurance professional and an accomplished risk and claims manager. As the Executive Director of Risk Management and Education at the Big I, Nancy has authored scores of risk-management related articles and presents to organizations like the Public Risk Manager Association (PRIMA), claims associations, and the Society for Human Resources. She is also the author of Workers' Compensation in Two Hours, a book geared toward small business owners and new insurance agents who want to learn more about this important coverage.
Nancy graduated with honors from Mills College and earned her Master's in Sociology from Lincoln University. She holds the Associate in Risk Management designation, the Associate in Claims designation, and is a certified Insurance Training Professional. Nancy also holds the prestigious Senior Professional in Human Resources designations.
Doug Sabella is the CEO and co-founder of Payroll Integrations. Sabella co-founded Payroll Integrations in 2016 to simplify payroll and benefit processes for employers and advance employees' financial wellness. The company's technology introduces a direct, two-way connection between payroll systems and benefits providers (401k, HSA/FSA, etc.) to automate the process of onboarding employees, updating benefit plans and managing employer/employee contributions.
Larry Nisenson is the Chief Growth Officer for Assured Allies, leading the new business initiatives for the company. Assured Allies features solutions including NeverStop, an innovative Wellness Rewards Program that's built right into your insurance policy.
For more than 25 years he has held leadership roles in the insurance and financial services industry, including Chief Commercial Officer for Genworth's U.S. Life Insurance business, covering long term care, life and annuity products. The role also included oversight for CareScout's Caregiver Support Services' commercial offerings. Prior to that role, Larry held senior leadership roles Plymouth Rock Assurance Company, AXA Equitable, American General Life Companies and Allstate. Larry started his career in financial services in 1995 as a financial advisor in New York City.
Larry received his BA from Rutgers University and attended the Global Executive Leadership Program at the Tuck School of Business at Dartmouth from 2018-2019. He also serves on the Board of Directors for the Rutgers School of Design Thinking as well as the Alumni Board for Sigma Phi Epsilon and is a public advocate and speaker on the caregiving dilemma that impacts millions of people.
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.
