Changes to FSA/DCAP rules due to COVID-19

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We know 2020 probably didn’t go as many people planned. That’s why the SEBB Program is offering employees extra flexibility with their 2020 Medical Flexible Spending Arrangement (FSA) and Dependent Care Assistance Program (DCAP) funds. These changes are allowed under the federal COVID-19 relief bill that passed in December 2020. They apply through December 31, 2021. A summary of the changes is outlined below.

Employees will be notified of these changes in the SEBB newsletter that mails on February 17.

2021 election changes with no qualifying event

Employees who enrolled in a Medical FSA or DCAP for 2021 can change their elections without a qualifying event three times in 2021: in March, June, and September. To make an election change, employees must submit the SEBB Change in Status form during these months. Payroll deduction changes are effective the following month.

  • Changes submitted in March are effective in April.
  • Changes submitted in June are effective in July.
  • Changes submitted in September are effective in October.

These opportunities only allow employees to change their 2021 annual elections. They cannot make any other changes, like enrolling in Medical FSA or DCAP, without a qualifying event.  Employees who want to make a change outside of March, June, and September must have a qualifying event that creates a special open enrollment.

We are currently updating the Change in Status form to reflect these opportunities. We will let you know when the new form is available. Normal election minimums and maximums still apply. Employees can only lower their election to the amount they have already contributed or claimed for the year. For example, if an employee elected $2,000 for their Medical FSA, and they have already contributed or claimed $400, they can lower their election only to $400.

Flexibility with 2020 DCAP funds

Employees can incur expenses and submit claims against 2020 DCAP funds through December 31, 2021 — giving them an extra 12 months to spend their funds. Employees can also spend 2020 funds on children up to when they turn age 14. (The normal limit is children up to age 13.)

If an employee also enrolled in a DCAP for 2021, any eligible expenses they incur will be reimbursed from their unused 2020 funds before being applied to their 2021 accounts.

The 12-month extension does not apply to Medical FSA funds. See below to learn about the Medical FSA grace period.

Spending Medical FSA funds after ending employment

Employees may use unspent 2020 or 2021 Medical FSA funds after they leave employment, without enrolling in SEBB Continuation Coverage (COBRA). If an employee left employment in 2020 or plans to do so in 2021, they can continue to incur expenses and submit claims for reimbursement through the end of the plan year in which they left employment (including the grace period).

For example, if an employee left work in October 2020, they have through March 15, 2021 to incur eligible expenses and through March 31, 2021 to submit claims against their 2020 funds. All requirements for submitting claims and documentation still apply.

Please note that employees’ Navia debit cards will not work once they leave employment. This means former employees must pay for services and submit a request for reimbursement.

The Medical FSA grace period still applies

As normal, employees may continue to incur eligible Medical FSA expenses and use 2020 funds through March 15, 2021. If employees reenrolled in a Medical FSA for 2021, any eligible expenses they incur during the grace period will be reimbursed from their unused 2020 funds before being applied to their 2021 accounts.

Employees must submit all eligible 2020 Medical FSA claims for reimbursement by March 31, 2021. (If an employee enrolled in UMP High Deductible for 2021, please see below for a different deadline.) After March 31, IRS rules require that any funds left in the employee’s account be returned to the Health Care Authority. Once returned, employees cannot reclaim those funds.

Submit claims and supporting documentation by:

  • Logging into your Navia account at naviabenefits.com
  • Email: claims@naviabenefits.com
  • Fax: 1-425-451-7002 or toll-free 1-866-535-9227
  • Mail: Navia Benefit Solutions, PO Box 53250, Bellevue, WA 98015-3250

If employees enrolled in UMP High Deductible for 2021

If an employee did not use all their 2020 Medical FSA funds and received reimbursement by December 31, 2020, neither they nor the SEBB organization can contribute to their health savings account (HSA) until April 1, 2021. In April, the employer contributions from January through March (and the SmartHealth $125 wellness incentive, if earned) will be deposited into their HSA.

Changing or ending employment

Employees can continue their Medical FSA or DCAP election when moving to another SEBB organization if the time between jobs is 30 days or less and within the current plan year. To do so, employees should submit the School Employment Transfer form to their new employer’s payroll or benefits office no later than 31 days after their first day of work.

If they end employment or retire during the year, they should submit the SEBB Medical FSA Termination form to their payroll or benefits office. These forms are available on Navia’s website at sebb.naviabenefits.com.