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.
Chana R. Schoenberger is the editor-in-chief of American Banker. Previously, she was the editor-in-chief of Financial Planning after joining Arizent in 2020.
In her prior role, she was the managing editor for U.S. wealth management at J.P. Morgan. Before that, she was a columnist and freelance journalist, and previously worked at Bloomberg News, Dow Jones/The Wall Street Journal, and Forbes. A graduate of Harvard College, she received her master's degree as part of Columbia Journalism School's Knight-Bagehot Fellowship in Economic and Business Journalism. She is now based in New York City after stints in Tokyo and Canada.
Follow her on X at @cschoenberger.
Holly Sraeel is Founder of The Most Powerful Women in Banking and SVP of Strategy and Content, American Banker Live Media, leading content creation and innovation for the events and live media portfolio and introducing new multimedia and invitation-only experiences for senior executives that drive critical conversations and action around corporate strategy, innovation and financial performance. She is part of the company's operational leadership team and is focused on developing cross-platform programming that creates higher levels of engagement for subscribers, community participants and partners across the company's brands, including American Banker, The Bond Buyer, National Mortgage News, Accounting Today, Digital Insurance, Financial Planning and Employee Benefits News.
Sraeel is an award-winning editorial director, media executive and content strategist with expertise in developing influential content, communities, and events for C-level executives in the banking and financial services, insurance, and technology industries. Prior to joining Arizent, she held several content leadership and strategist roles, including for B2B media consultancy New York Ventures, capital markets management consultancy Opimas, Oxford University-incubated startup Wise Responder, and as cofounder of Genesys Partners' Agility First Forum.
This new role marks a return to the company for Sraeel. In her previous 12-year run, she was a member of the executive team and was pivotal in driving new cross-platform editorial, events and business innovation as SVP of Brand Management; Group Editorial Director of Banking and Technology magazines; and Founder, President and Editorial Director of The Most Powerful Women in Banking,™ the company's first-ever, community-based media platform, now part of Arizent's flagship American Banker.
Sraeel is an early honors graduate of Marist College with a Bachelor of Arts degree in Communications and a concentration in journalism.
Andrew Larsen is a Director at Simon-Kucher within the insurance practice, with expertise in growth strategy, operating model design, and digital transformation.
He has led large-scale initiatives across financial services, insurance, and brokerage, delivering measurable impact in revenue growth, cost optimization, and AI-driven innovation.
His experience spans advising Fortune 500 companies, private equity portfolio firms, and emerging tech players on go-to-market strategy, operating model redesign, and AI.
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.
