On Tuesday, May 12, 2020, the IRS issued guidance permitting temporary increased flexibility to § 125 cafeteria plans. The IRS is will allow the following:

Health Flexible Spending Account (HFSA):

  • Allow employees to revoke decrease or increase an existing election due to the unanticipated changes in the need for or availability of medical care

Dependent Care Assistance Program (DCAP):

  • Allow employees to revoke decrease or increase an existing election due to the current situation with school and day care closures.

High Deductible Health Plans (HDHPs):

  • Retroactive to January 1, 2020, relief for high-deductible health plans to cover expenses related to COVID-19, and a temporary exemption for telehealth services.