Recent COVID-19 legislation affects TexFlex rules

In response to the COVID-19 pandemic, the federal Consolidated Appropriations Act of 2021 has changed rules for flexible spending accounts, including TexFlex.

  • All unused funds from Plan Year 2020 and 2021 TexFlex flexible spending accounts (FSAs) will carry over to Plan Year 2022. This includes health care, limited-purpose and dependent care FSAs. There is no limit to the amount that can be carried over. Because of this change, there will be no grace period for TexFlex dependent care FSAs at the beginning of PY22. Participants can continue to file claims to access the carryover funds. They do not have to do anything to make this happen.
  • If a participant leaves employment or stops participation in a TexFlex FSA before the end of Plan Year 2021, he or she can continue to incur expenses and file claims for reimbursement until August 31, 2021. Previously, participants could submit claims only for dates of services and expenses they incurred on or before their last day of employment or before they stopped participation.
  • For Plan Year 2021, participants can increase or decrease their contribution amount or end their participation in TexFlex without a qualifying life event (QLE). However, participants cannot reduce their annual contribution to an amount less than what they have already contributed.
  • In Plan Year 2021, participants can submit dependent care claims for children up to age 14. Normally, dependent care claims can be submitted only for children under age 13 who attend day care, before/after-school care or summer day camp.

The federal Coronavirus Aid Relief and Economic Security (CARES) Act also affects the way TexFlex works.

According to CARES Act, an employee no longer has to get a doctor’s order to use TexFlex funds to buy over-the counter (OTC) drugs like cold medicine, pain relievers and allergy medication. Feminine hygiene products are now considered an eligible expense. These CARES Act guidelines took effect immediately upon their passage and are retroactive to January 1, 2020.

For more information about the changes to TexFlex, please visit the ERS website. 

Source: ERS Update Express (March 2021)