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Hall Pass (Episode 5): COVID-19 and Pre-Tax Accounts

Hall Pass (Episode 5): COVID-19 and Pre-Tax Accounts

In this week’s episode of Hall Pass, CEO Jason Hall discusses COVID-19 and pre-tax accounts with Client Services Manager Michelle Dean. Michelle provides guidance for employers on how to effectively manage their pre-tax benefits in wake of the pandemic.

Check out the video below:

COVID-19 and Pre-Tax Accounts

Question 1: What should employers be doing to help their participants during COVID-19?

Employers should encourage employees to take advantage of the money in their benefit accounts so that money is not left on the table.

Check out our blog on 10 new eligible items you can buy with your pre-tax dollars

Question 2: What changes can assist participants in the preservation of their pre-tax funds?

Employers can change any plan’s run-out period. In addition, Extended Grace Periods can be added for Medical and Dependent Care FSAs. However, it’s important to keep in mind that if employers are changing from a $500 rollover to an Extended Grace Period, this may change when a participant is HSA-eligible in the next plan year.

Fortunately, a recent notice published by the IRS and Department of Labor works to assist in this manner. Check out our summary of the notice.

Question 3: What should employers be paying attention to regarding changes that have been made?

Employers should know the following items:

  • Dependent Care FSA Election Changes – Many participants in Dependent Care FSAs are likely making election changes due to COVID-19. However, Dependent Care FSA plans are subject to non-discrimination testing. Employers need to complete this testing before the end of the year so they can make adjustments if needed.
  • Commuter Election Changes – Employers should remind participants to change their elections if they are no longer commuting to work.
  • Autoposting and Reconciliation – If benefit plans are funded automatically based on participants’ election amounts, employers should reconcile the applicable deposits to make sure that they match payroll.
Question 4: What should employers know about employer-funded accounts (HRAs)?

If employers would like to make a change to their HRA regarding the amount or frequency of funding, they can reach out to their Client Services Specialist with any questions.