Recent weeks have seen some extraordinary moves in the financial markets, as the world reacts to the spread of COVID-19. Please know that we are closely monitoring current news and economic reports, and we are committed to supporting you through this season. Feel free to contact us any time, for any reason. We are here to help.
The IRS Allows Mid-Year Changes
In the wake of COVID-19, millions of Americans have been furloughed or laid off, had their hours cut or found their earnings reduced. As a result, an employee may find it difficult to make their healthcare premiums or may want to add a family member who now needs healthcare coverage to their plan.
Thanks to shutdowns and social distancing, unnecessary medical procedures have been postponed, and childcare facilities have temporarily closed or limited their capacity. As a result, many employees have used less than they planned from their Flexible Spending Account (FSA) or Dependent Care Flexible Spending Account (DCFSA).
Typically, changes to work-sponsored health plans or flexible spending accounts can only be made during the annual open enrollment period, except for qualifying events, such as getting married, having a baby, losing healthcare coverage or the death of a family member. Because of unique circumstances the coronavirus has created, the IRS announced on May 12 it was temporarily permitting employers to allow employees to change plans mid-year.
For the rest of the 2020 plan year, employers may let employees elect health coverage they previously declined or drop their company plan if they attest in writing that they are enrolled or will immediately enroll in other coverage. Employers may permit employees to change their healthcare plan election to one with lower premiums or better coverage, or to change their individual coverage to family coverage.
Likewise, employers may let employees revoke their FSA or DCFSA election, make a new election or decrease or increase their existing election. Employers may also allow staff to use money they hadn’t spent at the end of their 2019 plan year or grace period ending in 2020 through Dec. 31, 2020. FSAs or DCFSAs that offer a carryover can let employees carry up to $550 from 2020 over to 2021. Employees who lose or quit their job should use any unused flexible spending account funds before their last day at their present employer to avoid losing them.
It should be noted, the IRS does not require employers to offer all – or any – of these changes, so interested individuals should check with their HR department.
As always, do not hesitate to reach out with questions or concerns.
Biermaier Financial Management was created by Jim Biermaier in 2006. Before this he worked with two of the biggest names in the financial industry. After much soul searching, he and his family took a bold step. Jim decided to open his own firm as an independent financial advisor. His goal was to really get to know each individual client and address their specific needs. His passion became seeing each client as a family member, with their own passions, concerns, and life choices. Jim knew that if he was able to have open discussions with clients about life, dreams and finances he would be able to better serve each client. If each individual client is served this way our firm will continue to grow.
This mission continues today. Each financial advisor and staff member we add, our commitment stays strong. Serve each client like they are part of our family. There is not a person on our staff that doesn’t have a similar story and we encourage you to ask why we do what we do; this is not just a job, it is our calling. And we are excited that you are willing to take the next step to learn about how we can serve you. Our goal has always been to create your financial plan that will help you pursue the things you have been dreaming about.
Gain from an Independent Perspective
Biermaier Financial Management is an independently owned, full service financial firm with years of dedicated, personalized service to our clients.