BASIC FSA Alert: COVID-19 - 2019 PLAN YEAR RUN-OUT EXTENSION
Dear Valued BASIC Flex Client,
Due to the current health crisis, many employees are
struggling to submit their 2019 Health FSA and Dependent Care claims by the
Claim Filing Deadline stipulated in your Plan Document. For most employers
with a plan year ending 12/31/2019, the deadline to file claims is set to
expire on 03/31/2020.
Because of this unique situation, BASIC is allowing Flex
clients to extend the Run-Out Period for their 2019 plan year. In
addition, we will waive any fee to amend your Plan during this difficult
period. Please note this is a one-time offer that only applies to a plan year
ending on 12/31/2019 or later.
If you would like to take advantage of this offer and avoid
additional charges, you must follow these 2 steps:
Step 1: Click here
to authorize the plan change. Once this is completed, we’ll then make
the requested change in our administration platform. If possible, we
recommend you authorize this change before your standard Run-Out period
expires.
Step 2: Click here
to download a simple fill-in-the-blank Employee Notification. Complete this
form and distribute it to all employees who are eligible to participate in
the Flex Plan (it’s fine for non-participating employees to receive this
notice). E-mail distribution is acceptable.
Retain a copy of your authorization and your employee
notification with your other important Plan documents.
Important FAQs
Q: With the 2019 Tax Filing (and tax payment) deadline being
moved to July 15, 2020, does this also change the deadline to make 2019 HSA
contributions?
A: Yes. The deadline to fund HSA contributions for each year
aligns with the Tax Filing Deadline. Because the Tax Filing Deadline for 2019
has been moved to July 15, 2020, the IRS has confirmed that July 15, 2020 is
also the deadline to make 2019 contributions to an HSA account.
Q: We have a 2.5 Month Grace Period for our Flex Plan that
allows participants additional time to incur healthcare expenses after the
end of the plan year. Can we also extend that deadline?
A: No. The 2.5 Month Grace Period provision may not be
extended.
Q: We offer the $500 Carry-Over feature in our Health FSA. Can
we increase this amount?
A: No. $500 is the maximum Carry-Over a Plan may permit.
Q: Is BASIC able to extend the deadline for participants
to submit documentation supporting debit card transactions?
A: Yes. Currently, we require documentation to be
submitted within 60 days (for most clients). This deadline is being extended
to 120 days for virtually all clients, although we are not advertising this
change (we don’t want to encourage participants to take extra time if it is
not needed).
Q: Will unpaid furloughs be treated the same as an unpaid
leave of absence?
A: Yes, please refer to your plan document and internal leave
policy. Under many plans, an employee will cease to be an Eligible Employee
under the Cafeteria Plan upon termination of employment, layoff, or reduction
of hours. In this situation, benefits would terminate, and COBRA would
be offered if subject to federal COBRA law. However, some employers have
well-defined leave policies in which benefit eligibility is maintained during
an unpaid leave of absence.
Q: Are most employees that are eligible for employer provided
health insurance also eligible to participate in the Health FSA?
A: Yes. While it is not required, almost all employers
align their Health FSA eligibility with their medical plan eligibility.
Q: Can an employer allow employees to be eligible for the
Health FSA BEFORE they become eligible for the medical plan?
A: No. An employer may not make the medical plan waiting
period longer than the Health FSA waiting period.
We will continue to communicate any changes in the
legislations or regulations as they happen.
Please don’t hesitate to reach out to us if you have further
questions or require assistance.
Sincerely,
BASIC |