On Tuesday, May 12, 2020, the IRS issued guidance permitting temporary increased flexibility to § 125 cafeteria plans. The IRS is will allow the following:
Health Flexible Spending Account (HFSA):
- Allow employees to revoke decrease or increase an existing election due to the unanticipated changes in the need for or availability of medical care
Dependent Care Assistance Program (DCAP):
- Allow employees to revoke decrease or increase an existing election due to the current situation with school and day care closures.
High Deductible Health Plans (HDHPs):
- Retroactive to January 1, 2020, relief for high-deductible health plans to cover expenses related to COVID-19, and a temporary exemption for telehealth services.