Notices address unanticipated changes in expenses because of the COVID-19 pandemic.
The IRS just released guidance to allow temporary changes to Sec. 125 cafeteria plans. These changes extend the claims period for health FSAs and dependent care assistance programs, allow mid-year changes and adjust carryover to reflect inflation.
Notice 2020-29 provides for increased flexibility with respect to mid-year elections made under a § 125 cafeteria plan during calendar year 2020 related to employer-sponsored health coverage, health FSAs, and dependent care assistance programs. The notice also provides increased flexibility with respect to grace periods to apply unused health FSA and dependent care amounts toward expenses incurred through December 31, 2020. It also applies earlier relief for HDHPs to cover expenses related to COVID-19 (and a temporary exemption for telehealth services) retroactively to January 1, 2020. 
Notice 2020-33 increases the $500 limit for unused amounts remaining in a health FSA that may be carried over into the following year by making the carryover amount 20% of the maximum salary reduction amount under § 125(i), which is indexed for inflation. Thus, for 2020, the carryover amount will increase to $550.  Additionally, the notice cross references Notice 2020-29 for guidance on how a § 125 cafeteria plan may be amended to allow prospective health FSA election changes for the 2020 calendar year…providing relief that, among other things, permits employers to amend § 125 cafeteria plans to provide participants flexibility to change health FSA contribution elections.
Note: Individual Coverage HRAs – this guidance also provides clarification regarding reimbursement for premium expenses occurring prior to the beginning of the plan year.