During the COVID-19 pandemic there have been a number of temporary changes to Lehigh’s benefits arising from federal government guidance and legislation. We wanted to bring several recent updates that may apply to your circumstances to your attention. For more information about pandemic-related changes and guidance for faculty and staff, visit the HR website.
Relaxation of Requirements for Mid-Year Medical Insurance Changes
The IRS recently issued Notice 2021-15 in an effort to clarify the application of Section 214 of the Taxpayer Certainty and Disaster Tax Relief Act of 2020, recently enacted as part of the Consolidated Appropriations Act. This notice also relaxes some of the requirements pertaining to benefits plans such as Lehigh’s which are known as Section 125 cafeteria plans, specifically with regard to making mid-year changes to benefit elections.
As you may know, in exchange for tax-favored status, an employee’s benefit elections made as a new enrollment or during the annual open enrollment period are generally irrevocable for the remainder of the plan year. Certain circumstances, known as Qualifying Life Events (QLEs), only permit changes to elections that are consistent with the event itself (for example, you may add a new dependent to your plan after birth or adoption).
The relaxed regulations provide more flexibility to participants in a cafeteria plan, allowing an employee to revoke an election and make a new election without a QLE. While employers are not mandated to adopt any of the relaxed regulations, Lehigh has determined that adopting some of these changes will be in the best interest for our faculty, staff and their families.
Extension of Additional Sick Leave Provision
The additional sick leave provision that Lehigh implemented in early 2020 has been extended again. It will now continue through June 30, 2021.
As a reminder, here are the details of the provision:
Staff will be allotted an additional ten (10) days of sick leave if they exhaust their current available sick leave bank due to extended illness;
Staff may also use their sick leave bank and the ten additional days, if their sick leave bank is exhausted, in order to care for a sick family member who lives in the employee’s home and has a COVID19-related illness;
A doctor's note will not be required to use sick leave, however, if you are out of work because you have been quarantined due to possible exposure to COVID19 or have tested positive for COVID19 yourself a release to return to work is required prior to your return to campus. This release can be from a treating physician or from our Occupational Health Nurse through LVHN, Terri Latvis. If you are requesting the use of additional sick leave please complete this self-disclosure/certification form in order to track sick leave usage and arrangements.
Additional FSA Flexibility for 2020-2021
New COVID relief legislation (the Consolidated Appropriations Act (CAA), signed into law on December 27, 2020) allowed Lehigh to make changes to improve Healthcare Flexible Spending and Dependent Care Flexible Spending Accounts. Please note: These changes apply only to those employees who already elected FSAs. The changes do not allow for those who didn’t elect an FSA to elect one now.
We are increasing the carryover amount for the Healthcare FSA effective with the 2021 plan year. Prior to the passage of the Consolidated Appropriations Act, only amounts of $550 or less of unused funds would be permitted to carry over into 2021. With the passage of the CAA, we are allowing the full balance of your unused funds from 2020 to carry over into the 2021 plan year.
The carryover will occur after March 31, 2021. Even if you did not elect to renew your healthcare FSA for the 2021 plan year, any remaining balance in your 2020 healthcare FSA will be applied in a new account for use in 2021. No action is needed from you.
If you had a Healthcare FSA in 2020 and are now covered on the High Deductible Health Plan with HSA, any unused funds in your 2020 FSA will be carried over and placed in a Limited Purpose FSA. This will allow you to maintain HSA eligibility while keeping your FSA funds for vision and dental expenses in 2021.
As a reminder, if you have a remaining balance in your 2020 healthcare FSA and have outstanding receipts for services incurred in the 2020 plan year, you may still submit those receipts for reimbursement from the account up until March 31, 2021. After March 31, any remaining balance will be automatically rolled over and applied to your 2021 account balance for use on 2021 expenses.
Dependent Care FSA
Historically, there has never been a carryover of unused funds permitted in a Dependent Care FSA. The Consolidated Appropriations Act now permits a carryover for the first time ever and for this year only. Any unused funds in a 2020 Dependent Care FSA account will automatically be carried over for use in 2021. Similar to the new carryover rule permitted with a healthcare FSA, there is no limit on the amount of the carryover for the Dependent Care FSA for this year.
The carryover will occur after March 31, 2021, even if you did not re-enroll in a DC FSA for the 2021 plan year (in that case, a new account will be started for you). No action is needed from you. This is a one-year change in the law and is not expected to continue past 2021.
We are also temporarily increasing the age for qualifying dependents from 13 to 14. If you had a qualifying dependent who turned (or will turn) age 13 during the 2020 or 2021 plan years, you may be able to use any unused funds from your Dependent Care FSA for expenses for that child until they turn 14.
*As a note: Historically, if an employee’s combined contributions and subsequent reimbursements from a Dependent Care FSA exceeded $5000 in a tax year the employee would be required to claim this excess on their 1040 tax form and the overage would be converted into taxable income. With the allowance of a carryover of unused funds from 2020 some employees may be faced with this for the 2021 tax year.
Changes in Elections for Healthcare and Dependent Care FSA Accounts without a Qualifying Life Event
Due to the increased carryover amounts permitted in both the Healthcare and Dependent Care FSA you may be faced with larger FSA amounts than you expected or can use. We will allow, for a limited time, a one-time reduction in your 2021 FSA elections without a Qualifying Life Event (QLE). If you would like to reduce your FSA elections in either account please complete this FSA Election Reduction Request form and return to INBEN@lehigh.edu.
All changes to your elections will be on a prospective basis and elections cannot be reduced to an amount less than your year to date contributions or reimbursements. The deadline for submitting the change request is April 15, 2021. Any request for a change to your FSA election after April 15, 2021 will require a qualifying life event in order to be approved and processed.