Can I change my Dependent Care FSA contribution amount if due to COVID-19 and an unforeseeable government shut-down?

[DonMateo03]

Isn't the use-it-or-lose-it FSA rule mainly to prevent fraud?  There is no fraud in reacting to a government shutdown, preventing daycare and after school services.

[MaryK4]

Yes, IRS Notice 2021-15 provides temporary special rules for health flexible spending arrangements (health FSAs) and dependent care assistance programs under section 125 cafeteria plans.  You can contact your employer if you need any changes.

The legislation:

• Provides flexibility with respect to carryovers of unused amounts from the 2020 and 2021 plan years
• Extends the permissible period for incurring claims for plan years ending in 2020 and 2021
• Provides a special rule regarding post-termination reimbursements from health FSAs during plan years 2020 and 2021
• Provides a special claims period and carryover rule for dependent care assistance programs when a dependent “ages out” during the COVID-19 public health emergency
• Allows certain mid-year election changes for health FSAs and dependent care assistance programs for plan years ending in 2021