As part of its response to the COVID-19 pandemic, the IRS is permitting more flexibility for midyear elections for employer-sponsored health coverage, health flexible spending arrangements (FSAs) and dependent care assistance programs.
Under Notice 2020-29, the IRS gives employers the option to allow employees to change their elections midyear under a Sec. 125 cafeteria plan during calendar year 2020. Under the plan, eligible employees can make a number of salary reduction contributions.
Notice 2020-29 also gives increased flexibility for grace periods to apply unused amounts in health FSAs to medical care expenses incurred through Dec. 31, and unused amounts in dependent care assistance programs to dependent care expenses incurred through Dec. 31.
Additionally, the relief enacted by the Coronavirus Aid, Relief and Economic Security Act allows telehealth and other remote care services to qualify as expenses reimbursable by high-deductible health plans.