Update on COVID-19 Benefits Changes Affecting Pre-Tax Elections, FSA, HRA, COBRA, & HSA
Starting with the CARES Act in late March, there have been a series of significant legal changes impacting benefit plans. We want to draw your attention to 7 specific changes that may impact your organization and plan participants. During our webinar last week, we covered these changes in some detail, and we now have additional information about system and process updates. While it is important that you are aware of these new rules, we are happy to report that in most cases, our system has already been updated to apply them and no significant action is required on your part.

If you missed our webinar, we recommend watching the recording, which is only 30 minutes and is available on our YouTube channel. You can also also view the supporting slides.
 
A summary of changes and how ProBenefits is adapting to support your plans and people:
 
  • Over-the-counter drugs & medicines may be reimbursed tax-free by FSAs/HSAs/HRAs without a prescription. This is effective for expenses incurred 1/1/2020 and after. Participants who have ProBenefits debit cards can use them to purchase these items at most locations now, and we are accepting reimbursement claims for out-of-pocket purchases. While many of the following changes are intended to be temporary relief related to the COVID-19 pandemic, this change is permanent and will continue beyond 2020.

  • Expanded pre-tax election changes are allowed under IRS Section 125 for the 2020 calendar year. As a temporary relief measure, through 12/31/2020, you may allow participants to make additional election changes outside of the usually strict requirements for health plan pre-tax premiums, Health FSAs, and Dependent Care FSAs. Please contact us if you have an employee election change request that you are not sure about, and we will be happy to help you evaluate the situation.

  • Claims & appeals deadlines for Health FSA and HRA plans have been extended. For claims runout periods ending after 3/1/2020, this rule extends the final claim filing date until 60 days after the end of the outbreak period. Typical runout periods are 90 days for FSAs and 90-180 days for HRAs, so this change affects most Health FSA and HRA plans that ended 12/31/2019 or later, and some HRAs that ended as far back as 9/30/2019. The final filing date for these plans has been extended in our system to at least 8/31/2020, and will continue to be changed as necessary depending on the duration of the outbreak period. Please note that this DOL/IRS rule was released on 5/4, and overlaps to some degree with IRS Notice 2020-29, released 5/12, which also affects the final filing dates for some FSA plans (explained below).

  • Eligible dates of service have been extended for incurred expenses under Health FSAs & Dependent Care FSAs. For Health FSAs, Limited Dental/Vision FSAs, and Dependent Care FSAs that originally included eligible dates of service of 1/1/2020 or after, IRS Notice 2020-29 extends the dates of service to 12/31/2020. This includes all FSA plans that end in 2020, as well as Health FSA plans that ended 10/31/2019 through 12/31/2019 and included the 75-day grace period. For FSA plans that end in 2020 and include the 75-day grace period, the eligible dates of service extend through either 12/31/20 or the end of the grace period, whichever is later. This also effectively extends the claims runout periods for these plans to at least 12/31/2020. We have made these deadline extensions in our system for all applicable plans. That said, we are aware that certain employers may have exceptional circumstances such that the claims incurred extension could be problematic (including mid-2020 implementation of HSA bank accounts). We will do our best to accommodate such special request if the request is made to us by 5/31/2020. We will have less administrative flexibility after that time. Accordingly, we will be communicating this change to participants soon after 5/31/2020. Even so, know that participants are already able to file claims under the new deadlines and take advantage of the COVID-19 friendly rules.

  • The maximum carryover amount for Health FSAs is increased for plan years beginning 2020 and beyond. Like the OTC prescription requirement changes, this change is intended to be permanent. For Health FSA plan years beginning in 2020, the amount that can be carried forward into 2021 plan years will increase from $500 to $550, and going forward will be indexed at 20% of the IRS Health FSA maximum election amount. This increase will automatically take place for affected plan years in our system.

  • COBRA deadlines for elections & premium payments have been extended. ProBenefits is working with our partners and carrier contacts to determine how carriers will be handling the practicalities of these coverage changes and how state laws may apply. The extended deadlines apply retroactively to March 1, and will extend through 60 days after a defined "outbreak period." More details to be provided soon to COBRA clients.

  • HIPAA special enrollment periods & deadlines for plan sponsors to provide required notices have been extended. Special enrollment periods extended include: (1) period when employee or dependent loses eligibility for other health coverage in which they were enrolled, or when an eligible employee acquires a dependent through birth, marriage, or adoption; and (2) period triggered by changes in eligibility for state premium assistance under CHIP.

Some of these changes do require updates to the legal documents for your plans. Our compliance team is working to address this need, and you will be receiving new documents soon. NOTE: Your participants are eligible to take advantage of the relief measures prior to your receipt of the updated SPD, so the documents are not a holdup to any new change.

We will continue to update both our Participant and Partner Common Questions posts with new information as we receive it. We also encourage you and your participants to follow us on social media for breaking news and helpful tips.

We know that this is a lot to absorb, on top of all your other concerns at this time. As always, we are here to help you. Please contact your Account Manager directly, reach out to us by email at Service@ProBenefits.com or Compliance@ProBenefits.com, or call us at 888.722.8382 if you have any questions at all about how these changes apply to your plan.