2021 dependent care limits go up in latest COVID relief package

Employers with 2021 dependent care flexible spending accounts have several changes to contend with.

The American Rescue Plan Act just raised the annual limits for pretax contributions for 2021. (Note: This applies to the calendar year.)

The 2021 dependent care limits:

• $10,500 for single taxpayers (up from $5,000), and
• $5,250 for married individuals filing separately (previously $2,500).

Make sure everyone realizes these changes don’t apply to healthcare FSAs at all. That contribution limit remains unchanged at $2,750.

Communicating constantly changing benefits info

As we’re already hitting the second quarter, you’ll want to let employees know ASAP about the new limits.

This past year benefits info has changed time and again. In a regular year it can be hard to stay on top of everything. And this year has been anything but regular. Plus, info changes in the middle of the year.

So how can you make sure employees don’t miss anything important, like the new 2021 dependent care limit?

Keep up a steady flow of reminders and tips via a Twitter feed, Facebook page or internal channel like Slack. Provide an easy-to-use channel for employees to talk about questions and concerns. Share links to videos and podcasts, and keep adding fresh content.