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American Rescue Plan Act of 2021

Learn more about the provisions for an increase of the dependent care flexible spending account (DCFSA) contribution limit.

On March 11, 2021, President Biden signed into law the latest COVID-19 relief bill, the American Rescue Plan Act (ARPA) of 2021. This wide-ranging bill includes provisions for an increase of the dependent care flexible spending account (DCFSA) contribution limit.

For 2021 only, the DCFSA contribution limit for qualifying dependent care expenses is increased from $5,000 to $10,500 for individuals or married couples filing jointly and from $2,500 to $5,250 for married individuals filing separately. 

  • The increase in the DCFSA contribution limit is optional. Employers may amend their plans if they wish to implement this change.
  • Plans may be amended retroactively, so long as the amendment is adopted by the last day of the plan year in which the amendment is effective and the plan is operated in compliance with the amendment’s terms beginning on its effective date.
  • Employers will want to consider the impact on non-discrimination requirements that this change may have. Highly compensated employees may elect to increase elections at a higher rate, which may cause discrimination issues. 
  • Employers may choose to elect a maximum contribution that is less than the new contribution limit. 

Please contact your Relationship Manager or Optum Financial client services if you have any questions about adopting the temporary provisions included in ARPA 2021. We advise you to speak with your tax or benefits counsel regarding interpretation of the legislation. 

Related resources

EBSA Disaster Relief Notice 2021-01 - FSA & HRA

Get clarification around the timing of claim submission deadline extensions for flexible spending accounts (FSAs) and health reimbursement arrangements (HRAs), due to COVID-19.

IRS 2022 HSA Contribution Limits

The IRS announced an increase in HSA contribution limits for the 2022 tax year

Self-directed mutual fund investment options are made available through the services of an independent investment advisor, or your plan sponsor. Discretionary advisory services are provided by Betterment LLC, an SEC-registered investment adviser, with associated brokerage transactions provided by Betterment Securities, Member FINRA/SIPC. For details and disclosures visit The Schwab Health Savings Brokerage Account is offered to certain account holders through Charles Schwab & Co., Inc., Member FINRA/SIPC. For details and disclosures, visit Brokerage services are offered to certain accountholders through TD Ameritrade, Inc., Member FDIC/SIPC and a subsidiary of The Charles Schwab Corporation. For details and disclosures, visit

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Flexible spending accounts (FSAs), dependent care assistance programs (DCAPs), health reimbursement arrangements (HRAs), Commuter and Parking Benefits, Tuition Assistance Plans, Adoption Assistance Plans, Surrogacy Assistance Plans, Wellness Benefits, and Lifestyle Accounts (collectively, “Employer-Sponsored Plans”) are administered on behalf of your plan sponsor by Optum Financial, Inc. or ConnectYourCare, LLC (collectively, "Optum Financial") and are subject to eligibility and restrictions. Employer-Sponsored Plans are not individually owned and amounts available under the Employer-Sponsored Plan are not FDIC insured. This communication is not intended as legal or tax advice. Federal and state laws and regulations are subject to change. Please contact a legal or tax professional for advice on eligibility, tax treatment, and restrictions. Please contact your plan administrator with questions about enrollment or plan restrictions.

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