Public agencies that established flexible changes or extensions for employer-sponsored health coverage, health flexible spending accounts (health FSAs), or dependent care assistance programs (DCAPs) in response to COVID-19 in 2021, must ensure they affirmatively amend their Section 125 plan documents to reflect the changes by December 31, 2022. Agencies should start preparing these amendments now in order to adopt them by the strict deadline.
In 2021, employers were allowed to adopt flexible options to permit employees to make mid-year election changes to their health coverage, health FSAs, and DCAPs; adopt carryovers and increase carryover amounts; extend grace periods; spend down health FSA funds; increase a dependent’s maximum age for DCAP fund coverage, and increase the maximum DCAP contribution. While the flexible changes were optional, any employer who took advantage of the flexible changes in 2021 is required to adopt a written plan amendment to reflect these changes. The amendments must be adopted by December 31, 2022, in order for them to apply retroactively to 2021.
