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
IRS 2022 HSA Contribution Limits
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 betterment.com. 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 schwab.com. 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 tdameritrade.com.
Orders are accepted to effect transactions in securities only as an accommodation to HSA owners. Optum Financial and its subsidiaries are not broker-dealer or registered investment advisors and do not provide investment advice or research concerning securities, make recommendations concerning securities, or otherwise solicit securities transactions.
Health savings accounts (HSAs) are individual accounts offered through Optum Bank®, Member FDIC, or ConnectYourCare, LLC, an IRS-Designated Non-Bank Custodian of HSAs, each a subsidiary of Optum Financial, Inc. Neither Optum Financial, Inc. nor ConnectYourCare, LLC is a bank or an FDIC insured institution. HSAs are subject to eligibility requirements and restrictions on deposits and withdrawals to avoid IRS penalties. State taxes may apply. Fees may reduce earnings on account.
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.
Google Play and the Google Play logo are trademarks of Google LLC. Apple and the Apple logo are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc., registered in the U.S. and other countries.
The promotional code OPTFSA7, OPTHSA5 and OPTHRA7 cannot be applied to previously placed orders, and cannot be combined with other promotional codes. Additionally, the code cannot be used for prescription drugs or virtual care visits. Promotional codes are not transferable or redeemable for cash or credit. To apply a promotional code you must enter it prior to completing the order.
Free and expedited shipping offers do not apply to shipping outside of the contiguous United States. Additional shipping restrictions may apply.
The Optum Store is an affiliate of the UnitedHealth Group family of companies.
Your employer sponsored plan may exclude reimbursement for certain categories of items. Check your plan document and summary plan description or contact your benefits department for specific coverage details.
© 2022 Optum, Inc. All rights reserved
Investments are not FDIC insured, are not bank issued or guaranteed by Optum Financial or its subsidiaries, including Optum Bank, and are subject to risk including fluctuations in value and the possible loss of the principal amount invested.