IRS Issues Guidance on COVID-19 Relief for Health FSAs and DCAPs

On Feb. 18, 2021, the IRS released Notice 2021-15 to clarify special rules for Section 125 plans, health flexible spending arrangements (FSAs) and dependent care assistance programs (DCAPs).

Temporary Special Rules for Health FSAs and DCAPs

The Notice is intended to clarify the application of special rules for health FSAs and DCAPs provided under the Consolidated Appropriations Act, 2021 (CAA). The CAA provides flexibility with respect to carryovers of unused amounts, extends the time period for incurring claims, permits post-termination reimbursements from health FSAs and provides special rules for dependents who “age out” of DCAP coverage during the COVID-19 public health emergency. The Notice provides details and examples regarding these rules.

Section 125 Mid-year Election Changes

The Notice’s relief for mid-year Section 125 plan elections for plan years ending in 2021 is similar to prior guidance for calendar year 2020. Section 125 plans may permit employees to make or revoke election changes in certain circumstances. The Notice clarifies that employers can decide how long to permit mid-year election changes with no change in status during the plan year and can limit the number of election changes during the plan year that are not associated with a change in status

Over-the-Counter Drugs

The Notice also provides relief with respect to plan amendments expanding reimbursable expenses for health FSAs and HRAs to include over-the-counter drugs and menstrual care products. Amendments to these plans must normally be made on a prospective basis, but these amendments may allow these reimbursements beginning on or after Jan. 1, 2020.

OSHA Issues Proposed Rule Updating the Hazard Communication Standard

On Feb. 5, 2021, the Occupational Safety and Health Administration (OSHA)  released a proposed rule to update its Hazard Communication Standard (HCS) to align it with the Globally Harmonized System of Classification and Labelling of Chemicals (GHS). OSHA is accepting comments on the proposal until 60 days after its publication, which is expected on Feb. 16, 2021.  

The current HCS provides a uniform approach to workplace hazard communications associated with exposure to hazardous chemicals. The rule was updated in 2012 to align it with the GHS in order to provide a common and coherent approach to classifying chemicals and communicating hazard information.

The Proposed Rule

This HCS update aims to help employers improve the quality and consistency of the information recorded on safety data sheets (SDSs) and how they communicate this information to their workers. OSHA believes improved information and communication will increase worker protections and reduce the incidence of chemical-related occupational illnesses and injuries. The proposed modifications include:

þ  Revised criteria for classification of certain health and physical hazards;

þ  Revised provisions for updating labels;

þ  New labeling rules for small containers;

þ  Technical amendments related to the contents of SDSs; and

þ  Revisions to definitions of terms used in the standard.

Next Steps for Employers

Employers subject to the HCS should review this proposed rule to determine whether it affects their current information and communication processes.  These employers should also continue to monitor OSHA’s website for updates on the proposal.