In light of the economic disruption resulting from the coronavirus pandemic (COVID-19), IRS Notice 2020-29 allows employers to give employees the opportunity to make mid-year cafeteria plan election changes. It also extends the claims period for health flexible spending arrangements (FSAs) and dependent care assistance programs. Separately, Notice 2020-33 increases the amount of unused FSA funds that can be carried over to the following year from $500 to $550 for 2020 plans.
The new guidance allows employers to provide additional flexibility to employees regarding cafeteria plan elections. Employers should consider how to communicate to employees any changes and how to coordinate with plan administrators on the timing and impact of new elections.
Workforce of the Future, Rewards and Well-Being Leader, PwC US