Consolidated Appropriations Act (CAA) of 2021: Resources for Administrators

What is the Consolidation Appropriation Act of 2021?

The Consolidation Appropriation Act (CAA), 2021 is an act signed by congress on December 27, 2020, providing nearly $1 trillion in COVID-related relief. This piece of legislation also provides welcome relief for Flexible Spending Accounts (FSAs) which was requested by employers and other industry advocates. Specific provisions within the act allow employers the opportunity to review their plan designs and decide which changes should be implemented to provide additional assistance with Flexible Spending Accounts (FSAs) and Dependent Care Flexible Spending Accounts (DCFSAs). Since its passing, the IRS has provided further guidance related to the implementation of this relief.

Download the CAA of 2021 Resource Kit for Benefit Administrators, to access:

  • Definitions, key takeaways and guidance interpretation for administrators
  • Frequently asked questions on the legislation
  • A replay of our recent webinar featuring benefits attorney Jason Lacey

 
Get the CAA Resource Kit

 

What does this mean for Benefit Administrators?

Impact on carryover

The CAA includes many provisions which may provide temporary relief to employees in FSAs and DCFSAs. Amongst these provisions is the carryover of unused funds for plans ending in 2020 and 2021. This carryover allows consumers to utilize the remaining unused funds in their account after the plan year has expired.

Impact on carry forward for DCFSA

The CAA has created a special carry forward rule for dependent care FSA dependents. An employee may receive qualified childcare reimbursements for an eligible dependent who is below the age of 14 (as opposed to below 13 per the current law).

Impact on Grace Periods

The CAA also extended the grace period for 12 months for health FSAs and DCFSAs. The grace period for a plan year ending in 2020 or 2021 will extend to 12 months after the end of the plan year. Health FSAs may not have both a grace period and a carryover.

For more detail on these provisions, download the CAA of 2021 Resource Kit for Benefit Administrators below.

 

What other relevant provisions are listed in the CAA?

The CAA allows an employee who ceases participation in an FSA or DCFSA during the calendar year of 2020 or 2021 to continue to receive reimbursements from unused benefits or contributions for expenses which may be incurred through the end of the plan year. Employees who are terminated resulting in a loss of participation one of these accounts may be eligible to access unused benefits.

The CAA also includes a provision that allows employees enrolled in a health FSA or DCFSA ending in 2021 to make an election to prospectively modify the amount of contributions.

Finally, the CAA includes provisions on health care plan amendments for employees enrolled in FSAs and DCFSAs. The legislation allows for plan amendments if the amendment is adopted no later than the last day of the first calendar year beginning after the end of the plan year in which the amendment is effective. The plan must also be operated consistent with the terms of the amendment during the period beginning on the effective date of the amendment ending on the date the amendment is adopted.

Alegeus recently hosted a webinar on this topic with benefits attorney Jason Lacey. The webinar goes into more detail on the CAA provisions and what benefits administrators need to know about the new regulations. A replay of this webinar is included in the CAA of 2021 Resource Kit for Benefit Administrators.

Download the CAA Resource Kit

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