This is the second in a series of articles discussing the impact that the COVID-19 (coronavirus) pandemic and the governmental responses to it have had on employee benefits. The first article addressed key issues involving employer group health plans. This article focuses on the impact on group health plan continuation coverage, HIPAA privacy, and other welfare benefit plans.
On Halloween, the IRS treated employers and health flexible spending account participants to a change in the longstanding "use it or lose it" rule. Beginning immediately, employers may amend their cafeteria plans to allow participants to carry over up to $500 of unused FSA funds at the end of the plan year so that the carryover can be used to reimburse qualified medical expenses incurred in the following plan year. In addition, the amount carried over will not count against the permitted $2,500 salary reduction limit applicable to the next plan year.