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How do the 2020 plan year rule amendments affect my remaining Dependent Care FSA balance?
Under recent IRS guidance, employers may allow all unspent funds from the 2020 Dependent Care FSA plan year to be carried over to the 2021 plan year. The State of Michigan has adopted this change. Therefore, any unused funds from your 2020 Dependent Care FSA will carry over to your 2021 Dependent Care FSA. This change will be configured in HealthEquity WageWorks’ system the evening of March 17, 2021. Prior to that date, their system will reflect a grace period only for Dependent Care FSAs.
Employees are eligible for this carry over to the 2021 plan year if their account was active on December 31, 2020 and either did not enroll for the 2021 plan year or are actively enrolled in the 2021 plan year. Funds may be applied to:
- Eligible 2020 expenses submitted by March 31, 2021, or
- Eligible expenses incurred in 2021, or
- Eligible expenses incurred during the corresponding 2021 grace period ending March 15, 2022, submitted by March 31, 2022.
Remaining 2020 plan year balance information will display in HealthEquity WageWorks’ system as being part of the 2021 account balance after April 15, 2021.