The American Rescue Plan Act of 2021 (ARPA) has established new annual limits for pretax contributions to dependent care FSAs. The annual limits are increased to $10,500 (up from $5,000) for single taxpayers and married couples filing jointly and to $5,250 (up from $2,500) for married individuals filing separately.
The Internal Revenue Service has announced that Personal Protective Equipment now is considered an eligible FSA expense under medical flexible spending account (FSA) plans. This includes masks, hand sanitizer, and sanitizing wipes used to protect against COVID-19. The addition of these Personal Protective Equipment (PPE) items to the list of FSA-eligible expenses is retroactive and effective for expenses incurred on or after January 1, 2020.
Rules signed into law in December 2020 under the COVID-related Tax Relief Act of 2020 provide financial relief and flexibility to employees who participate in medical and/or dependent care FSAs. As a result of the new rules, Montgomery County Public Schools (MCPS) has adopted the following changes: