On March 11, 2021, President Biden signed into law the American Rescue Plan Act of 2021 (ARPA). The legislation goes into effect April 1, 2021 and contains provisions for an increase to the annual Dependent Care FSA contribution limit for 2021.
Dependent Care FSA Limit Increase
For plan years beginning after December 31, 2020 and before January 1, 2022, employers may allow a one-year increase to the annual Dependent Care FSA contribution limit.
- ARPA allows for the Dependent Care FSA contribution limit to be increased to $10,500 or $5,250 for married individuals filing jointly.
- APRA automatically sunsets this increase at the end of the 2021 calendar year. (Meaning, as of today, the limit will be reduced back down to $5,000 for 2022.)
- Employers who want to offer the limit increase to their employees must amend their plan documents by December 31, 2021.
Run-Out Deadline
For most of our January 1 renewal plans, the deadline to file FSA claims for the 2020 plan year is March 31, 2021. Instructions can be found on our website for How to File an FSA Reimbursement. (Please know this deadline may not apply to your group specifically.)
Consolidated Appropriations Act, 2021 (CAA)
Remember that the CAA allows for changes to be made to your FSA accounts for the 2021 Plan Year. A detailed update was posted on January 12, 2021.