Consolidated Appropriations Act of 2021 Archives

Departments Release FAQs on Implementing the Mental Health and Substance Use Disorder Parity Requirements under the Consolidated Appropriations Act

As described in a recent blog post, the Consolidated Appropriations Act, 2021 amended the Mental Health Parity and Addiction Equity Act (MHPAEA) to require group health plans and health insurance issuers (collectively, “group health plans”) that impose non-quantitative treatment limitations (NQTLs) on mental health or substance use disorder (MH/SUD) benefits to perform and document comparative analyses, in order to demonstrate that such NQTLs comply with the requirements of the MHPAEA¹. This requirement became effective on February 10, 2021, along with the requirement that a group health plan must provide the comparative analyses to the Department of Labor (DOL), Health and Human Services (HHS), or applicable State authority upon request.

The Consolidated Appropriations Act also directed the DOL, HHS, and the Treasury (together, the “Departments”) to issue additional guidance for group health plans, intended to clarify and provide examples of methods group health plans may implement to comply with the comparative analyses and disclosure obligations.

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IRS Clarifies Pandemic-Related Relief for Dependent Care FSAs

As noted in our prior blog posts here and here, the Consolidated Appropriations Act of 2021 (the “Act”) includes several types of relief for flexible spending accounts (“FSAs”), impacting both health and dependent care FSAs. In February, the IRS issued Notice 2021-15 (the “Notice”), which provides clarifying guidance with respect to the Act’s FSA relief provisions and answers many of the outstanding questions posed by employers following the Act’s passage. Our prior blog post answers common questions about how the guidance applies to health FSA benefits. Below we describe the key changes in the Act and the Notice (together, the “Relief”) specific to dependent care FSAs.

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IRS Clarifies Relief for Health FSA Benefits under the Consolidated Appropriations Act of 2021

As noted in our prior blog posts here and here, Section 214 of the Consolidated Appropriations Act of 2021 (“Act”) permits employers to amend their flexible spending account (FSA) plans to help participants avoid forfeiting unused amounts for the 2020 and 2021 plan years. The Act offers employers a myriad of temporary relief options for health FSAs—including expanded carryover relief, extended grace period relief, mid-year election change relief and post-termination spend down relief. The IRS recently issued Notice 2021-15 (“Notice”) giving employers significant flexibility to tailor these relief options to their particular concerns and objectives. This blog post answers common questions about how the guidance applies to health FSA benefits; the application to dependent care FSA benefits will be discussed in a forthcoming blog post.

Employers should keep in mind that:

All of the relief options are optional. An employer can choose not to adopt any of them or can adopt only some options.
All of the relief options require plan amendments.
The options do not permit participants to receive refunds of their unused contributions.
The options do not permit participants to use health FSA balances for dependent care expenses or vice versa.

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Flexible Spending Account Relief in the Consolidated Appropriations Act of 2021

As noted in our prior blog post, the Consolidated Appropriations Act, 2021 (the Act) includes several types of relief for flexible spending accounts (FSAs), impacting both health FSAs and dependent care FSAs. The FSA relief provisions in the Act address a concern raised frequently by employees and employers in 2020 — must employees forfeit their remaining 2020 FSA funds based on the rules that normally apply to FSAs under the Internal Revenue Code (the Code), given that, due to the COVID-19 pandemic, many employees’ actual 2020 health and dependent care expenses were significantly less than employees anticipated when they elected FSA coverage for 2020?

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