The Coronavirus Aid, Relief, and Economic Security (CARES) Act, signed into law March 27, 2020, contains important updates on contributions to Dependent Care Flexible Spending Accounts (DCFSAs). The CARES Act allows employees to decrease or stop contributions to your DCFSA.
Here are a few situations that have arisen due to the COVID-19 pandemic that may affect your DCFSA.
Scenario A: Your child’s daycare closes causing a loss of care and a loss of care expenses. This is a significant reduction or elimination in your annual cost of care. Because your care expenses have decreased, you may decrease your election or stop participating in the plan.
Scenario B: You are now working from home and can keep your children home instead of going to daycare. This is a significant reduction or elimination in your cost of care. Because your care expenses have decreased, you may decrease your election or stop participating in the plan.
Note: The effective date of the change will be the next pay period after your request is processed.
Keep in mind, you must request the change to your DCFSA in writing by submitting the status change that occurred. If you opt to stop participating in the plan, you will not be reimbursed for any money deducted from your paycheck. You will be able to use the funds that you have already contributed year-to-date through the end of the year.
All requests to cancel or change the annual elected amount of your DCFSA must be submitted via the COVID-19 Dependent Care (DCFSA) Change Application on the Total Rewards website. In deciding whether to cancel or change the amount, you should be mindful that a DCFSA is a “use it or lose it” account. In that regard, any funds in the account must be used by the March 15, 2021 grace period. There is a run-out period through March 31, 2021 to submit for expenses incurred during the enrollment period and grace period.
Full-Time employees currently enrolled in a DCFSA can change the election amount due to stay-at-home, shelter-in-place mandates, or change in employment status such as reduction in hours or FMLA leaves.
If you elect to stop your contributions, you will not be able to restart it for the remainder of the 2020 enrollment year. The funds you’ve accumulated in your account in 2020 for daycare expenses will expire on March 21, 2021.
No refunds can be provided for funds already contributed.