COVID Relief for Dependent Care Spending Accounts
New COVID relief was recently passed as part of the IRS Consolidated Appropriations Act 2021. This relief gives employees more flexibility in paying for dependent care, since there are still many unknowns when it comes to COVID and a return to normalcy.
If you have elected or plan to elect a Dependent Care Spending Account (DCSA), here’s how the provisions of the Consolidated Appropriations Act 2021 may impact you.
Unused DCSA funds from 2020 and 2021 can now be carried over into the next year. Any unused funds as of December 31, 2022, will be forfeited.
Below are the key dates to know for DCSA carryover with Optum Financial (formerly known as ConnectYourCare).
March 31, 2021
Deadline to submit any 2020 claims to Optum Financial.
April 1, 2021
Any funds not used from 2020 will automatically carry over to your active DCSA balance.
In the table below are different examples of how the new carryover provisions may impact you based on your situation.
|Scenario||2020 DCSA Carryover||2021 DCSA Election||Impact|
|If Susan doesn’t submit any 2020 claims by March 31, 2021, her $500 balance will automatically carryover into 2021 on April 1, 2021 making her total balance $3,000.|
|If John doesn’t submit any 2020 claims by March 31, 2021, his $725 carryover will be used to automatically create a DCSA for 2021 with a $725 balance.|
|Maria files a $250 claim in February for a 2020 expense, reducing her carryover balance to $750. On April 1, 2021, Maria’s $750 carryover is used to automatically create a DSCA for her for 2021.|
Note: Your DCSA contributions will continue to be reported on your Form W-2 based on your annual payroll deduction amount at the end of the year.
Updating Your Elections
You can elect, start, or stop your DCSA contribution by selecting the Change in Dependent Care Cost or Provider qualifying life event on
K-C Benefit Compass. Election changes can be submitted until November 1, 2021. After adjusting your contribution, it may take one or two payroll cycles to be reflected on your paycheck.
Note: If you make an election change, you can only submit eligible expenses you incur from the date of the event through the remainder of the year. Expenses incurred prior to your election change date are not eligible for reimbursement.
You may claim expenses for dependents who turned 14 (previously age 13) in 2021. See IRS Publication 503 to learn more.
Note: You’re responsible for understanding and complying with IRS Guidelines and are encouraged to seek legal and/or tax advice regarding your DCSA.
DCSA Carryover Questions
Call Optum Financial at 844-594-1228. Representatives are available 24/7, 365 days a year.
DCSA Contribution Questions
Call Empyrean at 800-551-2333. Representatives are available Monday through Friday, 9 a.m. to 5 p.m. ET.