On December 27, 2020, the President signed into law the Consolidated Appropriations Act of 2021 (CAA). The Act contains several provisions that impact healthcare plans and also includes several rules extending COVID relief. Below is a brief summary of the CAA provisions pertaining to employer sponsored health and welfare plans.


  •  The CAA allows for expansion of grace periods and rollover provisions of unused health and dependent care FSA amounts for 2020 and 2021. Employers can extend the grace period until the end of the following year so that FSA amounts remaining at the end of 2020 can be carried over and used for qualified medical or dependent care expenses through the end of 2021. FSA amounts that remain from 2021 elections can be carried over and used through the end of 2022. Alternatively, plan sponsors can elect to change existing health FSA rollover limits to an unlimited amount for 2020 and 2021.
  • Plans can allow for mid-year election changes to health FSAs and dependent care accounts without a qualifying event through 2021.
  • Plans may allow the definition of a dependent for dependent care purposes to be increased from 13 to 14 years old for those members who aged out of the plan during the pandemic. Unused dependent care FSA amounts can be applied to amounts for children until they turn age 14 at least through the end of 2021.

DG Notes – For Diversified healthcare FSA and dependent care FSA clients, you will be receiving a direct notification about these changes and will be asked to notify the administrator regarding any amendments you may choose to implement.


In April 2020, the Families First Coronavirus Relief Act (FFCRA) made it compulsory for plan sponsor to allow up to 80 hours of paid sick leave and paid extension of FMLA to employees who were experiencing time away from work due to pre-defined COVID-19 related reasons (such as childcare concerns due to daycare or school closures or having to self-quarantine due to your own illness or exposure). These FFCRA paid leave provisions expired on December 31, 2020.

The CAA did not extend employees’ entitlement to FFCRA leave beyond Dec. 31, 2020, meaning employers will no longer be legally required to provide such leave. The CAA extended employer tax credits for paid sick leave and expanded family and medical leave voluntarily provided to employees for leaves through March 31, 2021. However, this Act did not extend an eligible employee’s entitlement to FFCRA leave beyond December 31, 2020. The extended tax credit applies to wages paid in taxable years beginning after December 31, 2020 and extends the tax credit for employers who provide paid family and medical leave to their employees. Eligible employers may claim the credit, which is equal to a percentage of wages they pay to qualifying employees while they’re on family and medical leave up to December 31, 2025.

DG Notes – No action is required by employers to amend their plans to remove FFCRA leave extensions as all prior amendments automatically expired on December 31, 2020. Diversified is working with our stop loss partners to determine coverage implications for employers who may be interested in voluntarily extending FFCRA paid leave provisions in order to receive the tax credit. Please notify your Account Executive if you are interested in continuing FFCRA paid leave provisions on a voluntary basis through March 31, 2021. We will work with you individually to determine amendment requirements and carrier coverage.


The Act included economic aid to hard hit small business, nonprofits and entertainment venues. Rules pertaining to this aid is due no later than 10 days following enactment of CAA. Additionally, PPP loans expand to include included covered operations, property damage costs, covered supplier costs, and covered worker protection expenditures. “Group insurance” is re-defined as “payment required for the provisions of group healthcare or group life, disability, vision, or dental insurance benefits, including insurance premiums.”


Enables employers to provide a student loan repayment benefit to employees on a tax-free basis. Under the provision, an employer may contribute up to $5,250 annually toward an employee’s student loans, and such payment would be excluded from the employee’s income. The provision applies to any student loan payments made by an employer on behalf of an employee after date of enactment and before January 1, 2026 (previously January 1, 2021).


With the CAA is the “No Surprises Act” which sets new rules that begin in 2022 whereby individuals can no longer be “balanced billed” without their consent when they seek emergency care, when transported by an air ambulance, or when receiving non-emergency care at an in-network hospital but unknowingly are treated by an out-of-network provider. These providers will be limited in their ability to charge an employer for the excess costs, such as through an appeals process to dispute the amount being paid by the insurer or the health plan.

DG Notes – The No Surprises Act has been on the docket for over two years in one form or another. Further guidance will be needed to more fully address the manner in which these new requirements will be carried out. At that time, health plans may need to be amended to adopt new provisions as they become effective.

Diversified Group will continue to monitor guidance as it becomes available. In the meantime, if you have any questions please feel free to reach out to our compliance team:

Dave Follansbee, VP of Operations and Compliance
dfollansbee@diversifiedgb.com or (860) 295-6531

Laura Williams, Business Development and Compliance Consultant
lwilliams@diversifiedgb.com or (860) 612-8644

DG Compliance