The 9 Consumer Benefit Legislation Changes of 2020 You Should Know

The Internal Revenue Service (IRS) announced that the 2021 HSA contribution limits increased, allowing employees with individual coverage to set aside up to $3,600 a year and those with family plans to save up to $7,200. The minimum deductible for qualifying high-deductible health plans (HDHPs) and the maximum out-of-pocket expenses for HDHPs also increased.

Read more about these changes for the new year.

The 2021 health care flexible spending account (FSA) and commuter benefit contribution limits will remain the same as 2020, while adoption assistance contribution limits will increase by $140. The health care FSA contribution limit will stay at $2,750, but the rollover limit for FSAs did increase by $50 to $550. The limit for commuter benefits remains $270, while adoption assistance increased to $14,440 for families adopting a child.

Read more about these 2021 contribution amounts.

The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) of 2020 was passed into law and offered new provisions for users of HSAs, FSAs, and health reimbursement arrangements (HRAs). The CARES Act added over 20,000 new eligible items, removed the prescription requirement for over-the-counter medications, and extended pre-deductible coverage to telehealth.

Learn more about eligible items and the CARES Act.

To remove barriers for testing and treatment of COVID-19, the IRS on March 11, 2020, announced in Notice 2020-15 that COVID-19 testing and treatment is considered preventive care and may be covered pre-deductible by an HDHP.

Learn more details about this accommodation for HDHP COVID-19 coverage.

In May, the IRS announced that individuals could make temporary, mid-year changes to Section 125 cafeteria plans and extended the claims period for health care FSAs, dependent care FSAs, and HRAs. This guidance was released in response to unexpected changes in personal, professional, and financial situations resulting from the COVID-19 pandemic and shutdowns. Employers could also choose to allow FSA participants an extension for using rollover funds or filing reimbursement claims from the previous plan year.

Read more about the mid-year cafeteria plan change and reimbursement extension guidance.

On April 28, 2020, the U.S. Department of Labor’s Employee Benefits Security Administration (EBSA) and the IRS issued EBSA Disaster Relief Notice 2020-01, which extends certain health care benefit deadlines to provide both participants and plan administrators extra time to comply with certain deadlines related to COBRA. For participants, there was an extension on when they had to notify plan sponsors of a qualifying life event for the purpose of an election change, extending COBRA, choosing COBRA continuation coverage, and making COBRA premium payments. For plan administrators, the rule also extended deadlines to provide COBRA election notices, benefit statements, and other notices and disclosures required by ERISA.

For more information, check our blog.

The U.S. Department of Labor announced the availability of two new COBRA model notices with the intention of providing further guidance “to ensure that qualified beneficiaries better understand the interactions between Medicare and COBRA.” The updated model notices expand upon traditional COBRA coverage eligibility to offer more insight into potentially complicated scenarios where both Medicare and COBRA come into play—including which coverage is paid out first, should a participant be enrolled in both programs, and the ability for a participant who loses their job to enroll in Medicare after their group plan coverage ends.

Get more details about the updated COBRA model notices.

The IRS announced the extension of the federal income tax filing deadline from April 15, 2020, to July 15, 2020 (IRS Notice IR-2020-58), and waived all penalties and interest on tax payments during the 90-day postponement, regardless of the amount owed. The extension was a reaction to changes and interruptions caused by the COVID-19 pandemic and shutdowns that began in March 2020. The new deadline also meant that HSA participants had more time to make their 2019 contributions and file taxes for HSA contributions.

For more information, see the IRS tax filing deadline announcement page.

The ability to offer a tax-free crisis relief account is not new benefits legislation, but these were widely implemented this year because of the COVID-19 pandemic. During a time of widespread disaster, employers may provide payments to employees for certain personal expenses as qualified disaster-relief payments that are free from payroll and income tax under Section 139 of the IRS Disaster Relief Payments tax law.

A crisis relief account is designed to help employees affected by a crisis pay for personal expenses like groceries, rent, mortgage payments, utilities, dependent care, home office expenses, and other bills during an unexpected emergency. Tax and legal counsel can assist employers with determining if a program implemented this year qualifies for a tax exemption.

For more about crisis relief accounts, check our detailed post.