These frequently asked questions have been updated as of March 9, 2021, to explain new provisions and specify provisions that were discontinued at the end of the 2020 plan year.

Changes to Flexible Spending Accounts (FSAs)


What new relief is available to UC benefits participants?

In response to the COVID-19 pandemic, provisions were included in the Consolidated Appropriations Act (CAA) of 2021, signed into law on Dec. 27, 2020, to provide relief to Flexible Spending Account (FSA) participants. On Feb. 18, 2021, the IRS issued guidance pertaining to the FSA provisions of the CAA. These documents provide for employers, at their discretion, to expand employees’ opportunities to make changes to their Health and Dependent Care (DepCare) FSAs, and allow flexibility in the use of funds contributed in 2020. 

UC has chosen to adopt the provisions outlined below to support employees who were unable to obtain eligible services during the pandemic and whose unclaimed contributions may have been subject to forfeiture absent this relief.

Which pandemic relief provisions are no longer available?

The “Extension Rule” published in 2020 expired twelve months after it was issued and is no longer available to UC employees. The Extension Rule extended the time periods during which participants could take certain actions relating to their group health plan coverage, including submitting claims for coverage, electing and paying for COBRA continuation coverage, enrolling in group health plan coverage under HIPAA special enrollment rights, and filing appeals for adverse benefit determinations. 

In addition, the relief provided by IRS Notice 2020-29 expired at the end of the 2020 plan year. The Notice expanded employees’ opportunities to make changes during the 2020 plan year to their Section 125 benefit plans, which for UC includes the medical plans and the Health and Dependent Care (DepCare) Flexible Spending Accounts.

How do I make changes?

Employees will need to contact the UCPath Center to request the changes. Here are the steps you will need to follow:

  • Log in to UCPath online
  • From the home page, select Ask UCPath Center
  • On the menu bar, select My Inquiries or Submit an Inquiry.
  • From the inquiry page select:
    • Topic = Benefits
    • Category = Benefits Election Inquiry
    • For Subject, type in Request COVID-19 FSA Event
    • For Description, type in Change election for Health FSA and/or DepCare FSA (as applicable)

You will receive an email notifying you when the event has been opened and you can log in to UCPath to make your desired changes.  After making changes, you will receive a email confirmation of your election(s).

Once the event is opened, you will have 31 days to log into the UCPath portal and make changes.  The event will close automatically after 31 days if no action is taken.

When will benefit election changes go into effect?

All election changes are prospective. The effective date of coverage will be the first of the month following the date the event was opened, not the date you make changes.

For example, if UCPath opens the event on June 25 and you make changes on June 26, the changes will go into effect prospectively on July 1. If you make changes on July 2, the changes will go into effect retroactively on July 1. The revised deduction would occur from the August 1 paycheck.  The date of the changes is subject to payroll deadlines.

How many times can I make changes to my plans during this period of pandemic relief?

You may make up to two election changes per FSA plan during the 2021 plan year. That is, as applicable to your plan participation, you may make no more than two changes to your Health FSA and no more than two changes to your DepCare election this calendar year.

When can I make changes under the pandemic relief provisions?

Eligible individuals may request changes to their FSA elections beginning March 15, 2021. The latest date to make changes under the current pandemic relief provisions is October 29, 2021.

Changes to Flexible Spending Accounts (FSAs)

How do the new relief provisions affect my Health FSA?

Following is a list of the new relief provisions for the Health FSA:

Carry-over of Full Remaining Balance

2020 to 2021: Provided you have at least a $25 balance, the full remaining balance of unused Health FSA funds in a participants’ account will be carried over from the 2020 plan year to the 2021 plan year (not limited to $550 as announced last year). This may include amounts carried forward from the 2019 plan year that went unused in 2020.

2021 to 2022: Provided you have at least a $25 balance, the full remaining balance of unused Health FSA funds in a participants’ account will be carried over from the 2021 plan year to the 2022 plan year. This may include amounts from the 2020 plan year that went unused in 2021.

How do the new relief provisions affect my Dependent Care (DepCare) FSA?

Following is a list of the new relief provisions.

Grace Period Extension

The grace period for the 2020 DepCare plan year is extended to 12 months after the end of the 2020 plan year. The grace period for 2020 will end Dec. 31, 2021. The run-out period will extend to January 31, 2022. Therefore, funds contributed in plan year 2020 can be used for reimbursement of claims incurred in calendar years 2020 and 2021, and claims must be submitted by January 31, 2022. 

Similarly, the grace period for the 2021 DepCare plan year is extended to 12 months after the end of the 2021 plan year. The grace period for 2021 will end Dec. 31, 2022. The run-out period will extend to Jan. 31, 2023. Therefore, funds contributed in plan year 2021 can be used for reimbursement of claims incurred in calendar years 2021 and 2022 and claims must be submitted by January 31, 2023.

Increase in Maximum Age of Eligible Dependents

The maximum age for eligible dependents under DepCare is temporarily increased to those under 14 years of age. In order to qualify for this relief, an employee must have been enrolled in DepCare in 2020 and have a dependent child who turns 13 during 2020 or 2021. Claims for eligible dependents under the temporarily increased maximum age will be allowed for plan year 2020 and plan year 2021, but limited to the unused amounts from 2020. This means that claims incurred in 2020 and 2021 for children 13 years old and younger may be reimbursed from funds contributed in 2020. Funds contributed in 2021 may only be used to reimburse claims for children 12 years old and younger.

Mid-Year Election Changes without a Qualifying Life Event

Beginning March 15, 2021, eligible employees will be allowed to modify their DepCare plan year 2021 elections prospectively, as follows:

  • Cancel their 2021 participation
  • Make a new election for 2021
  • Change their 2021 election

What changes can I make to my FSA?

UC employees eligible to participate in the Faculty/Staff benefits program Flexible Spending Account plans (Full, Mid-level or Core benefits) may elect to participate in the Health or DepCare FSA plans, change their election for the FSA plans (such as change their contribution amounts), or cancel their participation in the FSA plans for the 2021 plan year. 

When is the 2020 claims “blackout period” and why is it necessary?

In order the make the changes described above to the carry-over and grace period rules, the current and former FSA administrators, Discovery Benefits/Wex and WageWorks, will need to impose a “blackout” period in which they cannot process claims or issue reimbursements to participants for expenses incurred in 2020. During this time, WageWorks will transfer data on 2020 plan participants and claims to Discovery Benefits/Wex. This blackout period will begin April 16, 2021, and extend no later than the end of May 2021.

Participants are advised not to submit claims for 2020 expenses during the blackout period, as they may be denied.

The customer service teams at both companies will continue to serve participants as usual and will be able to look up information in their systems to assist participants with inquiries.

Can I continue to submit claims for reimbursement if I cancel my FSA participation?

If you cancel your FSA participation, you may not file claims for services incurred after the cancellation. If you wish to stop your contributions for the remainder of the year but want to continue to incur eligible expenses, you should reduce your annual election to the amount already contributed.

How much can I decrease my contributions this year?

You can decrease your contributions to the amount you have already contributed this year.   Your new election amount cannot be lower than the amounts deducted year-to-date. In addition, a decrease in the annual election amount cannot be lower than the amount already reimbursed for claims in 2021.  Should either of these situations occur, UCPath will contact you and require that you change your election amount.

Can I be refunded amounts I have contributed this year?

No. IRS rules continue to prohibit refunds of employee contributions.

If I increase my Health FSA contribution for 2021, can I use the additional funds to pay for expenses incurred earlier this year?

No. Your new election is prospective — the additional FSA funds will be available for expenses incurred on or after the effective date of the change. 

For example:

Your Health FSA contribution effective Jan. 1, 2021, was $1,000. You increase your contribution to $2,500, effective April 1, 2021. Eligible expenses incurred through March 30 will be reimbursed up to $1,000. The additional funds will be available for eligible expenses incurred on or after April 1.

Does the carry-forward amount affect my maximum annual contribution or my taxable income?

The amount carried forward does not decrease the maximum annual contribution. The IRS guidance did not address the impact to taxable income if a participant contributes the maximum amount in a plan year and has funds carried over into that year. The amount above the maximum annual contribution could possibly be considered taxable income. We will share any future guidance on this issue. Plan participants are advised to consult a tax professional.

I know UC switched plan administrators this year. Where do I send my claims? What are the claims submission deadlines?

For this plan…

For an expense incurred in…

File claim to…

…During these dates

Health FSA

Calendar year 2020

WageWorks

No later than April 15, 2021

 

Calendar year 2021

Discovery Benefits/Wex

Jan. 1, 2021 - April 15, 2022

DepCare

Calendar year 2020

WageWorks

Until April 15, 2021*

 

Discovery Benefits/Wex

June 1, 2021* – January 31, 2022

 

Calendar year 2021

Discovery Benefits/Wex

Jan. 1, 2021 – Jan. 31, 2023

 

*Note – From April 16 through May 31 (end date to be confirmed), Discovery Benefits/Wex will be in a “blackout period” during which claims for plan year 2020 will not be processed. Participants are advised to hold 2020 claims until the blackout period is lifted.

Can I still submit claims for expenses incurred in 2019? Can I submit documentation for unsubstantiated claims from 2019?

No.  The 2019 plan year is closed for Health FSA and DepCare.

Can I use DepCare funds contributed in 2020 to reimburse expenses incurred in 2021?

Yes, DepCare funds contributed in plan year 2020 can be used for reimbursement of claims incurred in calendar years 2020 and 2021. 

In addition, DepCare funds contributed in plan year 2021 can be used for reimbursement of claims incurred in calendar years 2021 and 2022.

My child’s daycare center is still closed due to the pandemic. Can I decrease my DepCare election since I am not using daycare services?

Yes. You are permitted to revoke (cancel) or change your annual election amount on a prospective basis.

If you reduce your contribution, you may still incur and get reimbursed for eligible expenses for the remainder of the plan year and the grace period. If you decrease your election, your new election amount cannot be lower than the amount you already contributed. 

If you cancel your DepCare participation, you will not be able to submit claims for reimbursement for any expenses incurred this year after your cancellation date. 

Can I decrease my Heath FSA election for this year? My surgery was postponed so I do not have the health care expenses I anticipated when I chose my contribution amount for the year.

Yes. You are permitted to decrease your Health FSA election as long as your new election amount is not lower than your year-to-date deduction or the amount already reimbursed for expenses incurred this year.  You can also revoke (cancel) or increase your annual election. Note that if you cancel your participation, you will not be able to submit claims for reimbursement for any expenses incurred this year after your cancellation date.

I did not enroll in the Health FSA or DepCare during Open Enrollment for 2021. Can I enroll now?

Beginning March 15, 2021, you may enroll in the Health FSA or DepCare, provided you are eligible for the Faculty/Staff benefit program. You do not need a qualifying life event in order to enroll.

Am I eligible for the Health FSA carry-over or the extended DepCare grace period if I cancelled my FSA participation mid-year in 2020?

No. You need to have been enrolled in the applicable plan until the end of the previous plan year (Dec. 31, 2020) to be eligible for the Health FSA carry-over balance or the DepCare grace period in 2021.

When will carried-forward Health FSA funds be available for reimbursement?

Funds carried forward from 2020 to 2021 will be available in participants’ accounts by June 1, 2021. 

Funds carried forward from 2021 to 2022 will be available in participants’ accounts in early January 2022.

What happens to my Health or DepCare FSA if I get laid off or quit my UC job?

Health FSA participants can elect to continue participation through COBRA if you have a remaining balance in your account. If you have no remaining funds, your participation will end at the termination of your employment.

If you do not elect to continue participation through COBRA, expenses incurred after the termination date are not eligible for reimbursement, even if you have funds remaining. If you do elect to continue participation through the end of the year through COBRA, you may be eligible to carry over funds to the following year. Please contact your COBRA administrator to learn more about your options for continuing coverage.

DepCare FSA enrollment ceases upon the termination of your employment. You cannot submit claims for expenses incurred after the date of termination. 

If I leave UC employment in 2021 before the Health FSA carry-over balance becomes available, may I still submit claims to be reimbursed from the carried-over balance once it is available?

Yes, but only expenses incurred prior to plan termination would be eligible for reimbursement. You must have a minimum balance of $25 for funds to be carried over. You will need to submit claims manually since your debit card will be deactivated as soon as you leave UC.

Can I participate in a Health FSA and contribute to a Health Savings Account (HSA) at the same time?

No. Individuals may not contribute to an HSA during a month in which they participate in the Health FSA. In addition, if an individual has carry-forward FSA funds from the prior year, they cannot participate in an HSA; they must forfeit remaining carried-over funds in order to preserve their HSA eligibility. Claims incurred after your participation in the Health FSA has terminated are not eligible for reimbursement under the Health FSA.

If I cancel my Health FSA election, when can I begin to contribute to an HSA?

An individual who revokes participation in the Health FSA under the relief provisions may contribute to an HSA starting the month after their FSA participation ceases (note that an individual must have a Period of Initial Eligibility to change health plans mid-year).