New COVID-Relief Flexible Spending Account Rules Announced
New rules signed into law in December under the COVID-related Tax Relief Act of 2020 provide additional financial relief and flexibility to employees who participate in medical and/or dependent care flexible spending accounts (FSAs).
As a result of the new rules, Montgomery County Public Schools (MCPS) has adopted the following changes—
- Grace periods for spending unused account balances have been extended as follows:
- Employees who have unused medical or dependent care FSA funds from the 2020 calendar year will have until December 31, 2021, to incur claims and spend those remaining funds.
- Employees who have unused medical or dependent care FSA funds from the 2021 calendar year will have until December 31, 2022, to incur claims and spend those remaining funds.
- Medical FSA participants who terminate employment or retire from MCPS in 2020 or 2021 can spend their unused account balances on expenses incurred through the end of the calendar year in which their termination occurs, plus the 12-month grace period.
- The maximum age of eligible dependents for dependent care FSAs is increased to through age 13 for the 2020 calendar year. Unused account balances from the 2020 calendar year will carry over to the 2021 calendar year.
- Employees do not need to have experienced a qualifying life event to make changes to their FSA account elections during the 2021 calendar year. This means you may enroll in an FSA, change your contribution amount (up to maximum allowed but not less than amount already contributed), or cancel your participation for any reason, during 2021.