<div>After Minnesota Workers Lose Hundreds in Workplace Savings Accounts Following Layoffs, Childcare Closures, Sen. Smith Introduces Bills to Protect Workers’ Savings From Forfeiture Senator Says Workers Shouldn’t Have to Forfeit Flexible Savings Account Balances When Laid Off from a Job or Due to COVID-19 Crisis WASHINGTON, D.C. [8/3/20]–U.S. Senator Tina Smith (D- Minn.)–a member of the Senate Banking Committee–introduced two pieces of legislation to prevent workers from losing their health care and childcare savings when they lose a job, have a surgery cancelled, or a child care <table><tr><td colspan="7">center is closed. The measures are a direct response to letters Sen. Smith</td><td> </td></tr><tr><td colspan="7">received from constituents who had lost hundreds or thousands of</td><td> </td></tr><tr><td colspan="7">dollars in employer-based savings accounts following layoffs earlier this</td><td> </td></tr><tr><td>year.</td><td> </td><td> </td><td> </td><td> </td><td> </td><td> </td><td> </td></tr><tr><td colspan="7">Federal Savings Accounts (FSAs) are an optional benefit that employers</td><td> </td></tr><tr><td colspan="7">may offer to their employees. It allows workers to set aside money on a</td><td> </td></tr><tr><td colspan="7">tax-advantaged basis to pay for certain out-of-pocket expenses. But the</td><td> </td></tr><tr><td colspan="7">coronavirus (COVID-19) pandemic has made it difficult for many</td><td> </td></tr><tr><td colspan="7">workers to use their health and dependent FSA benefits. It's also made</td><td> </td></tr><tr><td colspan="7">many Americans lose their jobs. And unfortunately, under current</td><td> </td></tr><tr><td colspan="7">law, workers can be forced to forfeit their unused FSA funds if they lose</td><td> </td></tr><tr><td colspan="7">their job in a layoff or other event–even if the job loss is no fault of the</td><td> </td></tr><tr><td colspan="7">worker. In addition, for workers remaining on the job, unused funds can</td><td> </td></tr><tr><td colspan="5">be forfeited at year end.</td><td>and the</td><td> </td><td> </td></tr><tr><td colspan="3">Sen. Smith's</td><td> </td><td> </td><td> </td><td> </td><td> </td></tr><tr><td colspan="7">would ensure that workers who lose a job can have their savings</td><td> </td></tr><tr><td> </td><td> </td><td> </td><td colspan="2">Fair FSAs Act</td><td> </td><td>Dependent Care Exp nse Relief</td><td> </td></tr><tr><td colspan="7">refunded to them, and provide flexibility on the use of flexible spending</td><td> </td></tr><tr><td>Ac</td><td> </td><td> </td><td> </td><td> </td><td> </td><td> </td><td> </td></tr><tr><td colspan="4">arrangement</td><td colspan="3">funds in light of the COVID- 19 pandemic.</td><td> </td></tr><tr><td>“No one</td><td> </td><td> </td><td> </td><td colspan="3"> </td><td> </td></tr><tr><td> </td><td colspan="6">should lose the money they’ve set aside for medical</td><td> </td></tr><tr><td colspan="3">Sen. Smith.</td><td> </td><td> </td><td> </td><td> </td><td> </td></tr><tr><td> </td><td> </td><td colspan="5">and childcare simply because they’ve been laid off,”</td><td> </td></tr><tr><td colspan="2">expenses</td><td colspan="5">“And they shouldn’t lose their savings because of a said</td><td> </td></tr></table> cancelled surgery or closed childcare provider either. We should be doing all that we can to keep money in the pockets of workers, especially during this unprecedented public health and economic crisis. My legislation will help people who lost their jobs due to COVID-19 related economic downfall. It will also help workers with health FSAs who haven't spent down their balances due to COVID-19 canceling elective procedures and limiting health care out-of-pocket costs. Lastly, it will assist workers with dependent care FSAs who haven't been spending down their balances on preschools, childcareThe providers or afterschoolwould: programs due to the virus." <a href="https://smithsenate.box.com/s/q30wn9ilxg5z670oq8w5p5sjmmxk92f3">Fair FSAs Act of 2020</a> <table><tr><td>•</td><td colspan="2">Require plans to reimburse individuals their health FSA balance</td></tr><tr><td>•</td><td colspan="2">when they leave their job or their COBRA coverage expires, and</td></tr><tr><td> </td><td colspan="2">Require plans to roll over existing FSA balances to the next plan</td></tr><tr><td> </td><td colspan="2">year when requested by a participant due to COVID-19 related</td></tr><tr><td> </td><td>Dependent Care Expense Relief Act</td><td> </td></tr><tr><td> </td><td>reasons.</td><td> </td></tr><tr><td>•</td><td> </td><td> </td></tr><tr><td>The</td><td> </td><td>would:</td></tr><tr><td> </td><td colspan="2">Require plans to allow workers to spend down their account</td></tr><tr><td> </td><td colspan="2">balances through the end of the plan year if they are separated from</td></tr><tr><td>•</td><td>employment;</td><td> </td></tr><tr><td> </td><td colspan="2">Require plans to rollover remaining balances to 2021 if they are</td></tr><tr><td>•</td><td>unspent due to COVID-19; and</td><td> </td></tr><tr><td> </td><td colspan="2">Allow the IRS to expand the list of allowable expenses to include</td></tr><tr><td> </td><td colspan="2">dependent care expenses specific to the current public health</td></tr><tr><td> </td><td colspan="2">emergency. For example, this could include expenses such as internet</td></tr><tr><td> </td><td colspan="2">expenses, tutoring, virtual camps or other resources that can be used</td></tr><tr><td> </td><td colspan="2">at home to teach and entertain children while parents are working</td></tr><tr><td> </td><td colspan="2">(such as books and educational websites).</td></tr></table>  “Families across the state are struggling with health and financial uncertainty. As a major part of family budgets, child care is at the center of both struggles for many. Senator Smith’s Dependent Care FSA Account roll over bill gives them important additional options to make decisions that–DebrapiorFitzpatrick,izetheir DirectorsafetyandofPolicymaximizeand their LegislativefinancialstabilityAffairs,.Children’s” Defense Fund MN    "The Dependent Care FSA bill is a benefit to families in the current COVID related community. Families budget for childcare and expenses for a year in advance with their FSA. The current situation with unemployment, stay at home and school closures have caused new and significant hurdles for families and their budgets. Many families were laid off, required to work from home, furloughed, or worked nontraditional hours. Some childcare centers closed for periods of time. Childcare was also free to many essential workers at the school-age level for many months. These situations impacted families outside of their control. The cost of childcare became very inconsistent for many families. Being able to <div class="indented"><div class="indented">– Ann Riebel,for will</div></div> carry over and access the FSA dollars that they Educationwork Director,allowfamiliesWinonatoAreabudgetPublicinuncertainSchoolsCommunitytimes."“The Minnesota Child Care Association fully supports the extension of 2020 Dependent Care FSA benefits, as the impact of COVID-19 on employment also impacted the child care needs of many families.FSA’s are “use it or lose it” accounts, but parents weren’t able to plan for the pandemic. Allowing this year’s funds to roll over into 2021 is a solutiHorizonto hold families–harmlessChadDunkleyand provideandClarenecessary Sanford,flexibilityNewand financialAcademysupport.” “Allowing recipients to roll over unused dependent care FSA benefits is both a practical and compassionate action in these uncertain and difficult times. It’s one of the essential ways Congress can help keep a family’s economic–JanesecurityLeonard,afloatPresident,whilehelpingGrowthour&amp; Justicenation’s. economy recover, too.” The Dependent Care Expense Relief Act is endorsed by New Horizon Academy, Minnesota Child Care Association board, Marshall Area Chamber of Commerce, Indigenous Visioning, First Children’s Finance, Minnesota Head Start Association, Inc. and First <a href="https://smithsenate.box.com/s/q30wn9ilxg5z670oq8w5p5sjmmxk92f3">Children’s </a>Finance. You can access a summary of the Fair FSAs Act of 2020 here and a summary of the Dependent Care Expense Relief Act <a href="https://smithsenate.box.com/s/q30wn9ilxg5z670oq8w5p5sjmmxk92f3">here</a>. Dependent Care Expense Relief Act of 2020 Senator Tina Smith (D-Minn.)   Federal law allows employers to set up flexible spending arrangements (FSA) that let workers set aside funds for dependent care costs. Funds can be spent on a pre-tax basis, providing a potentially significant tax benefit, but must be used for dependent care expenses and in compliance with plan rules. Unfortunately, the COVID-19 pandemic has made it difficult for many families to utilize these benefits. Workers have lost their jobs, child care centers have closed, and dependent care needs have changed during this unprecedented time, leaving some families to fear that they will lose the hard-earned money they contributed to their Dependent Care FSAs. The Dependent Care Expense Relief Act would make several changes to help workers benefit from their Dependent Care FSAs. Specifically the bill would: <ul><li>Require plans to allow workers to spend down their account balances through the end of the plan year if they are separated from employment;</li></ul> <ul><li>Require plans to rollover remaining balances to 2021 if they are unspent due to COVID-19; and</li></ul> <ul><li>Allow the IRS to expand the list of allowable expenses to include dependent care expenses specific to the current public health emergency. For example, this could include expenses such as internet expenses, tutoring, virtual camps or other resources that can be used at home to teach and entertain children while parents are working (such as books and educational websites).</li></ul> The Dependent Care Expense Relief Act has been endorsed by: New Horizon Academy, Marshall Area Chamber of Commerce, Indigenous Visioning, and Minnesota Head Start Association. Fair FSAs Act of 2020 Senator Tina Smith (D-Minn.)  Health flexible spending arrangements (FSAs) are an optional benefit employers may offer that allow their employees to set aside money, on a tax-advantaged basis, to pay for certain out-of-pocket medical expenses. While under normal circumstances this benefit can be very helpful to workers and their families, the COVID-19 pandemic has made it much more difficult for individuals to utilize this benefit. Under current law, if a worker loses their job, they forfeit their unused health FSA contributions (which in some cases could be upwards of $2,000) to the plan. This is unfair to workers, especially during this unprecedented public health and economic crisis, when we should do all we can to keep money in the pockets of those who need it most. The COVID-19 pandemic has also resulted in the cancellation of elective procedures and a reduction in health care spending due to social distancing recommendations more generally. Many individuals with health FSAs are concerned that they will not be able to spend down their accounts by the end of their plan year and will thus lose their hard-earned benefits. The Fair FSAs Act of 2020 would address these issues by: 1) Requiring plans to reimburse individuals their health FSA balance when they leave their job or their COBRA coverage expires, and 2) Requiring plans to roll over existing FSA balances to the next plan year when requested by a participant due to COVID-19 related reasons.</div>

Sen. Smith Announces Savings Protection Bills

U.S. Senate

The Fair FSAs Act of 2020 and the Dependent Care Expense Relief Act would ensure that savings are refunded to workers who lose their jobs and increase flexibility for flexible spending arrangements, Sen. Tina Smith, D-Minn., said in an August 3 release.

The Fair FSAs Act of 2020 and the Dependent Care Expense Relief Act would ensure that savings are refunded to workers who lose their jobs and increase flexibility for flexible spending arrangements, Sen. Tina Smith, D-Minn., said in an August 3 release.