I 
116TH CONGRESS 
2D SESSION 
H. R. 7149 
To amend the Internal Revenue Code of 1986 to provide special disposition 
rules for unused benefits in flexible spending arrangements of individuals 
for calendar year 2020. 
IN THE HOUSE OF REPRESENTATIVES 
JUNE 11, 2020 
Mr. PALMER (for himself, Mr. COOK, Mr. HAGEDORN, Mrs. WAGNER, Mr. 
ADERHOLT, Mr. STIVERS, Mr. BALDERSON, Mr. PERRY, Mr. GIBBS, and 
Mr. STEWART) introduced the following bill; which was referred to the 
Committee on Ways and Means 
A BILL 
To amend the Internal Revenue Code of 1986 to provide 
special disposition rules for unused benefits in flexible 
spending arrangements of individuals for calendar year 
2020. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SPECIAL DISPOSITION RULES FOR UNUSED 
BENEFITS IN FLEXIBLE SPENDING ARRANGE-
MENTS OF INDIVIDUALS IN PLAN YEAR 2020. 
(a) FSAS MUST ALLOW DISTRIBUTION OR ROLL-
OVER IN 2020.—For purposes of sections 106, 125, and 
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129 of the Internal Revenue Code of 1986, a flexible 
spending arrangement must allow a qualified 2020 dis-
tribution or rollover. 
(b) TAXES APPLIED TO CERTAIN DISTRIBUTIONS.— 
For purposes of sections 125(a) and 129(a) of such Code, 
such sections shall not apply to any benefit distributed 
from a flexible spending arrangement for a use other than 
the qualifying benefit for which such arrangement was es-
tablished. 
(c) SPECIAL RULE FOR DISPOSITION OF UNUSED 
BENEFITS.—For purposes of such Code, a plan shall not 
fail to be treated as a cafeteria plan, health flexible spend-
ing arrangement, or dependent care flexible spending ar-
rangement merely because such arrangement provides for 
a qualified 2020 distribution or rollover. 
(d) QUALIFIED
2020 DISTRIBUTION
OR
ROLL-
OVER.—For purposes of this section, the term ‘‘qualified 
2020 distribution or rollover’’ means, for plan year 2020, 
any distribution at any time to an individual of all or a 
portion of the balance in the employee’s account under 
such arrangement, or the rollover of the balance in the 
employee’s account to plan year 2021. 
(e) APPLICATION.—This section shall only apply to 
distributions or rollovers in plan year 2020. 
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SEC. 2. CHANGE IN ELECTION AMOUNT. 
(a) IN GENERAL.—A plan or other arrangement that 
otherwise satisfies all applicable requirements of sections 
106 and 125 of the Internal Revenue Code of 1986 (in-
cluding any rules or regulations thereunder) shall not fail 
to be treated as a cafeteria plan or health flexible spending 
arrangement merely because such plan or arrangement al-
lows an employee to make, with respect to the remaining 
portion of a period of coverage within the applicable pe-
riod— 
(1) an election modifying the amount of such 
employee’s contributions to such a health flexible 
spending arrangement (without regard to any 
change in status), or 
(2) an election modifying the amount of such 
employee’s elective paid time off. Any election as 
modified under paragraph (1) shall not exceed the 
limitation applicable under section 125(i) for the 
taxable year. 
(b) ONE-TIME APPLICATION.—Paragraphs (1) and 
(2) of subsection (a) shall each apply to only 1 election 
change described in such paragraph with respect to an em-
ployee (in addition to any other election changes during 
a period of coverage permitted under the plan or arrange-
ment without regard to this section). 
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(c) APPLICABLE PERIOD.—For purposes of this sec-
tion, the term ‘‘applicable period’’ means the period begin-
ning on the date of the enactment of this Act and ending 
on December 31, 2020. 
SEC. 3. EXTENSION OF GRACE PERIODS, ETC. 
(a) IN GENERAL.—A plan or other arrangement that 
otherwise satisfies all applicable requirements of sections 
106, 125, or 129 of the Internal Revenue Code (including 
any rules or regulations thereunder) shall not fail to be 
treated as a cafeteria plan, health flexible spending ar-
rangement, or dependent care flexible spending arrange-
ment (whichever is applicable) merely because such plan 
or arrangement extends the grace period for the plan year 
ending in 2020 to 12 months after the end of such plan 
year, with respect to unused benefits or contributions re-
maining in a health flexible spending arrangement or a 
dependent care flexible spending arrangement. 
(b) POST-TERMINATION REIMBURSEMENTS FROM 
HEALTH FSAS.—A plan or other arrangement that other-
wise satisfies all applicable requirements of sections 106 
and 125 of the Internal Revenue Code of 1986 (including 
any rules or regulations thereunder) shall not fail to be 
treated as a cafeteria plan or health flexible spending ar-
rangement merely because such plan or arrangement al-
lows (under rules similar to the rules applicable to depend-
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