Since the start of the COVID-19 pandemic, we’ve seen many legislative and regulatory changes that have altered employee benefits. These regulatory changes were put in place to offer additional relief and extensions during a difficult time. Although much is uncertain, several of these changes are due to end at the conclusion of this calendar year. It’s important to be prepared and understand these changes going into 2022.

We’ve reviewed the legislative and regulatory changes that have occurred throughout this past year, and want to explain a few of the key events and their potential impacts for 2022.

2021 Regulatory Changes and Implications

Click the name of the regulatory change or keep scrolling for more information.

American Rescue Plan Act

Dependent Care Flexible Spending Accounts (FSA) Limits

The American Rescue Plan Act temporarily increased the Dependent Care FSA contribution limit from $5,000 to $10,500 ($2,500 to $5,250 for married filing separately) for the 2021 tax year. Employers have the option to update their Dependent Care FSA plan to include this contribution increase.

Participants who have non-calendar year plans and took advantage of the temporary Dependent Care FSA contribution increase must be careful not to exceed the calendar year statutory limits. Because this temporary increase expires on 12/31/21, participants must decrease their Dependent Care FSA contributions to the statutory limit for 2022 or they will be taxed on the difference. Participants must request their change within the election change window identified by their plan (typically 30 days).

For the latest information on plan limits, visit www.ebcflex.com/PlanLimits throughout the year.

Dependent Care Tax Credits

The American Rescue Plan Act also increased the amount of the child and dependent care tax credit to $4,000 for one qualifying individual, and to $8,000 for two or more qualifying individuals. In addition, the credit is potentially refundable.

These benefits are temporary and are currently set to revert back to their previous amounts after 12/31/21.

COBRA Subsidies

The American Rescue Plan Act also created COBRA subsidies from 04/01/2021 to 09/30/2021. These subsidies covered 100% of the group health premium that the qualified beneficiary is required to pay. While the subsidy period has ended, employers may still be able to file for tax credits to recover the premiums they paid. For more information, visit www.ebcflex.com/cobrasubsidy.

Coronavirus Aid, Relief, and Economic Security Act (CARES)

Telehealth and HSA Eligibility

One portion of the CARES Act expanded the term of medical care to temporarily allow telehealth care to be included under the deductible in HDHP without negatively impacting HSA eligibility. Telehealth became increasingly important during the pandemic due to decreased access to in-person care.

This temporary changes only applies for plan years beginning on or before 12/31/21. That means for calendar year plans, this special treatment ends as of 12/31/21.

Expanded Definition of Medical Care

OTC medicines and menstrual care products are now treated as medical care and can be reimbursed tax-free as an eligible expense from a FSA, HRA, and HSA. This change will remain in effect for 2022.

To learn more about eligible expenses, visit www.ebcflex.com/eligibleexpenses.

COVID-19 Vaccine and Testing Coverage

The CARES Act requires group health plans to cover certain COVID-19 tests and vaccines to be covered without cost sharing. With this change in place, individuals do not need to use their funds from their FSAs, HRAs, or HSAs for eligible COVID-19 testing and vaccinations.

Consolidated Appropriations Act (CAA)

CAA temporarily relaxed certain rules for FSA plans ending in 2021. Some of these changes include extended grace period (anything less than the maximum of 12 months), unlimited carryover of FSA funds, and relaxed mid-plan year election changes. Additionally, employees were able to opt out of their plan’s rollover or extended grace period to avoid any HSA eligibility issues.

These temporary rules are in effect for plans ending in 2021, meaning that plans adopting these changes may have carryovers or grace periods that extend through 2022.

EBSA Disaster Relief Notice

The EBSA disaster relief notice is the continuation of the Extension of Certain Timeframes for Employee Benefit Plans, Participants, and Beneficiaries Affected by the COVID-19 Outbreak. This continuation provides temporary relief from deadlines set to occur during the declared “Outbreak Period”, which began on March 1, 2020 and is still in effect. This notice will expire 60 days after the announced end of the National Emergency. At this point, the National Emergency is in effect through February 24, 2022.

The deadlines extended by EBSA include COBRA Continuation Coverage, Health and Disability Claims, and HIPAA Special Enrollment.

IRS Announcement 2021-07

To help prevent the spread of COVID-19, the IRS announced that PPE for the primary purpose of preventing the spread of COVID-19 would be considered an eligible expense. PPE that is considered an eligible expense includes face masks with multiple layers and nose wires, and hand sanitizer or sanitizing wipes with an alcohol content of 60% or greater.

PPE does not include household cleaning supplies or face shields.

This is an ongoing change and qualifying PPE will be considered an eligible expense moving forward into 2022.