Leftovers: Which COVID-19 relief provisions are still on the table?
The challenges presented by the pandemic sparked a number of benefits-related legislative changes throughout 2020 and 2021, impacting the administrative services we provide for employer clients. Note that, with the exception of the extension of various deadlines due to the COVID-19 National Emergency, most of the relief provisions were discretionary and likely required plan amendments. For those employer clients that elected to implement any of discretionary relief provisions, ProBenefits assisted with necessary updates to legal documents. If an employer declined to adopt some or all discretionary relief provisions discussed below, such provisions do not apply to the employer’s plan, and the updated documents provided by ProBenefits include only the legally-mandated relief provisions.
While there are some permanent changes, most of the legislative changes were designed to provide only temporary relief to benefit plan participants. Thus, by the time 2022 began, most (but not all) of the relief provisions had expired. The outline below provides an overview of where things stand.
Over-the-Counter Drugs and Medicines and Menstrual Care Items
Expenses incurred on or after January 1, 2020, for over-the-counter (OTC) drugs and medicines (e.g., pain relievers, cold and allergy medicines, acne treatments, etc.) are subject to tax-free reimbursement from Health FSAs, HSAs, and certain types of HRAs without a prescription. Menstrual care items are likewise subject to tax-free reimbursement. Unlike most of the COVID-19 legislative provisions addressed below, these changes were intended to be permanent, and they remain in effect.
Increase in Maximum Carryover Amount
Any Health FSA that has adopted a carryover provision may, for the plan year beginning in 2020, increase the maximum carryover amount to an amount equal to 20% of the maximum Health FSA salary reduction amount for that year (i.e., 20% of $2750 = $550 for the 2020 and 2021 plan years). Like the provisions described above relating to the reimbursement of OTC drugs and medicines and menstrual care items, the indexed carryover limit was intended to be a permanent change. The maximum carryover amount for plan years beginning in 2022 is $570 (20% of $2850).
Temporary Relief Still in Effect
Extension of Claims and Appeals Deadlines
When calculating the submission deadline for claims (including submissions during applicable runout periods) and appeals under Health FSAs and HRAs, participants are afforded an extension of time. Specifically, a participant’s claim or appeal will not be considered untimely as long it is submitted within the earlier of (a) one year from the original submission deadline, or (b) 60 days following the announced end of the National Emergency. It is not known at this time when the National Emergency will end.
Extension of COBRA Deadlines
The standard COBRA deadlines for a qualified beneficiary to make an election, notify the employer of a qualifying event or disability determination, and pay the applicable COBRA premiums are subject to an extension of time. Specifically, a qualified beneficiary’s election, notification, and payment will not be considered untimely as long it is submitted within the earlier of (a) one year from the original deadline, or (b) 60 days following the announced end of the National Emergency. It is not known at this time when the National Emergency will end.
Extension of HIPAA Special Enrollment Periods
The standard 30-day and 60-day deadlines for exercising special enrollment rights under group health plans and making corresponding cafeteria plan election changes are subject to an extension of time. Specifically, a participant’s request for special enrollment and a corresponding election change will not be considered untimely as long it is submitted within the earlier of (a) one year from the original special enrollment deadline, or (b) 60 days following the announced end of the National Emergency. It is not known at this time when the National Emergency will end.
Reimbursement of PPE
Expenses incurred on or after January 1, 2020, for personal protective equipment (PPE) such as masks, disposable gloves, hand sanitizer and sanitizing wipes, for the primary purpose of preventing the spread of the virus causing COVID-19, are amounts paid for medical care. As such, these expenses are subject to reimbursement under Health FSAs, HSAs, and certain types of HRAs. It is unclear whether the PPE-related guidance is intended to be permanent. However, for now, the guidance remains in effect.
Coverage and Reimbursement of OTC COVID-19 Tests
Effective January 15, 2022, group health plans and health insurance companies offering group or individual insurance coverage are required to cover the cost of over-the-counter (OTC) COVID-19 tests purchased during the COVID-19 National Emergency period, including tests obtained without the involvement of a health care provider. It appears that group health plan coverage and health insurance coverage of OTC tests are intended to expire after the 60-day period following the announced end of the National Emergency. It is not known at this time when the National Emergency will end.
To the extent that a group health plan or health insurance policy imposes any permissible limitations (on the number of OTC tests covered or on the reimbursement amount payable), participants may wish to submit the non-covered (or unreimbursed) portion of such expenses to their FSAs, HSAs or HRAs. However, a participant is not entitled to submit a claim for OTC COVID-19 tests to the participant’s health plan or insurance company and then seek payment or reimbursement for those same expenses from an FSA, HSA or HRA. It is unclear whether the guidance on FSA, HSA and HRA reimbursement of OTC testing is intended to be permanent. However, for now, such guidance remains in effect.
Temporary Relief That Has Expired
Cafeteria Plan Election Changes Without a Change in Status
During the 2020 calendar year and during the plan year ending in 2021, Employers were permitted to allow employees to make prospective election changes with respect to their pre-tax premiums for health, dental and vision coverage, their Health FSAs, and their Dependent Care FSAs. Such election changes during these time periods were permissible even in the absence of a change in status event. The expansion of the election change rules expired on the last day of the plan year ending in 2021, and the prior restrictions on election changes were reinstated.
Extension of Time for Incurring Claims
During the 2020 calendar year, Employers were permitted to allow participants to apply unused amounts in their Health FSAs (including Limited Purpose FSAs) and Dependent Care FSAs as of the end of a grace period ending in 2020 or a plan year ending in 2020 to pay or reimburse applicable expenses incurred through December 31, 2020. These extensions have expired.
Enhanced Carryover Provisions
Under rules similar to those described above relating to the extension of time for incurring claims, Employers were permitted to allow Health FSA participants to carry over any unused amounts from the plan year ending in 2020 (without imposing a dollar limit) to the plan year ending in 2021; and to carry over any unused amounts from the plan year ending in 2021 (without imposing a dollar limit) to the plan year ending in 2022. Although Health FSA participants may still be benefiting from the enhanced carryover amounts, these relief provisions have expired. At the conclusion of the plan year ending in 2022, the maximum Health FSA carryover amount will be limited to the indexed carryover maximum ($550 for fiscal year plans ending in 2022 and $570 for calendar year plans).
Extended Grace Periods
Under rules similar to the enhanced carryover provisions described above, Employers were permitted to extend the grace periods under Health FSAs and Dependent Care FSAs, for the plan year ending in 2020, for a period of 12 months (rather than 2½ months) after the end of the plan year; and for the plan year ending in 2021, for a period of 12 months (rather than 2½ months) after the end of the plan year. Although Health FSA and Dependent Care FSA participants may still be benefiting under extended grace periods, these relief provisions have expired. At the conclusion of the plan year ending in 2022, Health FSA and Dependent Care FSA grace periods will again be limited to a period of 2½ months.
Extended Post-Termination Spend-Down Provisions
Employers were permitted to allow any employee who ceased participation in a Health FSA during the 2020 calendar year or the 2021 calendar year to continue to receive reimbursements from unused benefits or contributions through the end of the plan year in which the employee’s participation ceased (including any grace period and any extension of the grace period permitted under the relief legislation). Although Health FSA participants may still be benefiting under extended spend-down periods, these relief provisions have expired. At the end of the 2021 plan year (i.e., the plan year beginning in 2021), or at the end of the grace period (if any) following the 2021 plan year, a Health FSA participant who ceases participation will generally be required to elect COBRA in order to access any unused benefits or contributions.
Increased Age Limit and Permitted Carryover for Dependent Care FSAs
With respect to the particular Dependent Care FSA plan year with an open enrollment period that ended on or immediately prior to January 31, 2020 (Plan Year 1), Employers were permitted to extend the maximum age of a “qualifying child” to age 13 for purposes of paying or reimbursing eligible expenses incurred during Plan Year 1. Furthermore, Employers were permitted to allow participants to use any amounts remaining at the end of such plan year to pay or reimburse eligible expenses incurred during the subsequent plan year (Plan Year 2) for one or more qualifying children who attained age 13 (but had not yet attained age 14) during Plan Year 1 or who attained age 13 during Plan Year 2. Participants in certain Dependent Care FSAs with a Plan Year 2 that began in 2021 may still be benefiting under the increased age and carryover provisions. However, these relief provisions have expired and will not apply beyond the end of such plan year.
Increased Dependent Care FSA Maximum
For the 2021 calendar year only, Employers were permitted to increase the maximum non-taxable benefit under their Dependent Care FSAs to $10,500 ($5,250 for married taxpayers filing separately). This temporary relief provision has expired. For the 2022 calendar year, the maximum non-taxable benefit a participant may receive under a Dependent Care FSA returns to the pre-relief limit of $5,000 ($2,500 for married taxpayers filing separately).
COBRA Subsidy Provisions
Certain individuals who lost group health plan coverage due to an involuntary termination or reduction of hours on or after October 1, 2019, but prior to September 30, 2021, were eligible for a 100% COBRA premium subsidy. The subsidy period was applicable for a maximum period of six months beginning April 1, 2021 and ending September 30, 2021. Private employers and state and local government employers were required to pay 100% of the applicable premiums during the COBRA subsidy period and were entitled to receive reimbursement for such payment from the federal government through a payroll tax credit. The COBRA subsidy relief provisions expired on September 30, 2021.