Coronavirus

Increased Flexibility in Cafeteria Plans

To address unanticipated health care expenses due to the COVID-19 pandemic, the IRS has issued guidance to increase flexibility in employees’ cafeteria plans. The IRS has added to the situations in which a cafeteria plan may allow employees to make mid-year elections, allowed more flexibility with respect to health flexible spending accounts (FSAs) and dependent care assistance programs under a cafeteria plan, and provided several rules with respect to high deductible health plans (HDHPs). Specifically, regarding health FSAs, the IRS increased for inflation the $500 permitted carryover amount to $550. Click here for more information about Notice 2020-29. © 2020