OCA’s COVID-19 Alerts
Our intention is to give you complete confidence that we are here for you, and that you can expect “business as usual” from us.
Our status for Friday, April 3, is Green
As we all continue to navigate the COVID-19 situation and its ripple effect on our businesses and personal lives, OCA continues to be laser-focused on protecting our clients and business operations to prevent any potential disruption to our service delivery. Given our shift to work-from-home operations and other proactive measures we have undertaken, we have decided to provide proactive updates as often as we can over the next week or two. Our intention is to give you complete confidence that we are here for you, and that you can expect “business as usual” from us.
Our average wait time (seconds) this week has been:
Tip of the day: Childcare has become a major concern during the COVID-19 crisis, due to closed schools and daycares, and some professionals needing to continue to work outside the home. Based on the broad application of the cost-change events in the regulations for dependent care FSAs (DCA), participants who have experienced a change in care or cost of care will, in most cases, be able to change their election amount. Examples include daycare closing (a change in cost) or the need to seek out a new childcare solution (a change in care). You can submit DCA election changes to OCA online by going to http://oca125.com/enrollterm/
OCA’s latest COVID-19 Alerts
When President Trump declared the Covid-19 pandemic a National Emergency in accordance with the Robert T. Stafford Disaster Relief and Emergency Assistance Act, he may have authorized employers to establish a Code Section 139 Qualified Disaster Relief Program...read more
On Friday March 27th the Coronavirus Aid, Relief, and Economic Security Act or the CARES Act was signed into law. The bill included a change impacting the use of funds from HSA, FSA, and in some instances HRA health benefit accounts. The bill reverses the prescription...read more
On March 27, 2020, President Trump signed into law a $2 trillion bill to address the economic fallout from the COVID-19 pandemic. The Coronavirus Aid, Relief and Economic Security (CARES) Act includes an expansion of unemployment benefits for the record 3.3...read more
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Frequently Asked Questions
Can an employer extend the run-out period?
Yes. The IRS does not prescribe a run out period for Health and Dependent Care FSAs; it is up to the employer to establish a run out period and to include that period in the plan document. If the employer wants to extend the period or open up another run-out period (assuming it has already ended for 2019), the employer need only amend the plan. OCA is waiving our fee to amend your run-out period if you choose to do so now.
Can the employer allow employees to revoke FSA elections and seek a refund of all unused dollars?
Not currently. The election rules still apply without exception.
What events during this period of time of work from home policies, furloughs and terminations will allow an FSA election change?
Health FSA election changes are permitted to the extent that they are on account of and consistent with a change in status event (as defined in the cafeteria plan regulations). An election change will not be consistent with the event unless the event causes the participant or a covered person to gain or lose eligibility under the Health FSA or cafeteria plan. Dependent Care FSAs are subject to the same rules; however, there are two notable differences: (i) Dependent Care FSA elections may also be changed on account of cost or coverage changes set forth in the cafeteria plan regulations and (ii) the election change rules are applied more loosely to the Dependent Care FSA elections than to Health FSA elections.
Will an employee who is working from home lose his or her unused commuter elections?
No. The transportation fringe benefit plan regulations allow participants to carry over funds from month to month so long as they remain employed. In addition, the regulations allow employees to change their salary reductions at any time for any reason so long as the election is made before the taxable benefits become available (i.e. it is prospective). This will allow employees to revoke their salary reductions while they are working from home. When they return, the unused funds will be available for eligible commuter benefits incurred after they return, and they can also make a new election for subsequent months if they wish to participate.
Can the employer extend the grace period?
Not currently. The IRS has indicated in prior guidance that the grace period ends on the 15th day of the 3rd month following the end of the plan year and only the IRS can change that. It is our understanding that the possibility of extending the grace period has been proposed to the IRS.
Can the employer allow employees to revoke FSA elections without a corresponding event?
Can an employer pay an employee’s COBRA premium for continued Health FSA coverage?
Nothing in COBRA prohibits an employer from paying a qualified beneficiary’s COBRA premiums for continued Health FSA coverage. We caution the employer to be aware of the Code Section 105(h) nondiscrimination rules when deciding which classes of employees for whom you will subsidize the cost of COBRA.
If a furloughed or laid off employee would otherwise lose health plan coverage in the absence of a COBRA election, can the employer continue active-like coverage for a period of time without a COBRA election?
The answer is an unequivocal “no” if the plan is fully insured or is self-insured with stop loss coverage. In those situations, if coverage is extended without the employee first having made a COBRA election, as required by the plan or policy, the employee is arguably covered erroneously and the carrier would be entitled to refuse coverage and could potentially claim fraud on the part of the employer. Employers who wish to provide such coverage should consult first with the insurance carrier and we strongly suggest you get any answer in writing.
Can an employer subsidize a qualified beneficiary’s COBRA coverage?
Probably, but we caution employers to first consult with the carrier before doing so. We are aware of situations where carriers have refused to provide benefits for a COBRA beneficiary on the basis that the beneficiary wasn’t eligible because the beneficiary didn’t pay 102% of the premium.
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OCA's COVID-19 Email History
Click the links below to access OCA's COVID-19 email updates.
- OCA Dependent Care Account (DCA) Tip of the day (Sent March 26, 2020)
- OCA Now Adding Online COBRA Payment Options (Sent March 25, 2020)
- OCA's COVID-19 FAQs (Sent March 24, 2020)
- OCA Now Able To Issue Employers COBRA Premiums via ACH (Sent March 23, 2020)
- Important COVID-19 Webinar with Ashley Gillihan, ESQ (Sent March 20, 2020)
- COVID-19 Update: OCA's ACH Failure Policy (Sent March 20, 2020)
- COVID-19 Update: Recommend Employees Sign up for Direct Deposit ( Sent March 19, 2020)
- OCA's COVID-19 Operational Update (Sent March 18, 2020)
- Extending the 2019 Run-Out Notice (Sent March 17, 2020)
- OCA COVID-19 Actions Update (Sent March 15, 2020)
- OCA's Business Continuity Plan (Sent March 12, 2020)
- IRS Issues Guidance Regarding COVID-19 and Health Savings Accounts (Sent March 12, 2020)