The IRS today released an advance version of Notice 2021-15 to clarify application of provisions of the “Taxpayer Certainty and Disaster Tax Relief Act of 2020” (enacted as part of the “Consolidated Appropriations Act, 2021” (Pub. L. No. 116-260)) which provides temporary special rules for health flexible spending arrangements (health FSAs) and dependent care assistance programs under section 125 cafeteria plans.
The relief provided by Notice 2021-15 [PDF 245 KB] is in response to the coronavirus (COVID-19) pandemic.
Notice 2021-15 explains that while the legislation refers to “dependent care flexible spending arrangements,” today’s IRS notice uses the term “dependent care assistance programs.”
Today’s notice also provides additional relief with respect to mid-year elections for plan years ending in 2021. Specifically, with respect to employer-sponsored health coverage, a section 125 cafeteria plan may permit employees who are eligible to make salary reduction contributions under the plan to take any of the following actions for plan years ending in 2021:
Notice 2021-15 also provides relief with respect to the effective date of amendments to section 125 cafeteria plans and health reimbursement arrangements (HRAs) to implement the expansion of allowed expenses for health FSAs and HRAs by the “Coronavirus Aid, Relief, and Economic Security Act” (CARES Act) (Pub. L. No. 116-136) to include over-the-counter drugs without prescriptions and menstrual care products.
The notice includes examples and sample language for use regarding the elections.
Read a related IRS release—IR-2021-40 (February 18, 2021)
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