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American Rescue Plan Act (ARPA): 2021 Dependent Care Update

Recently, Congress passed, and the President signed, the American Rescue Plan Act of 2021 (ARPA).

ARPA provides sweeping COVID-19 relief that includes an increase in the Dependent Care (DCAP) FSA limit for 2021 from $5,000 to $10,500 (from $2,500 to $5,250 for married filing single). This is optional to employers not mandatory.

Employers can amend their cafeteria plan retroactively to adopt this increased limit, as long as they amend the plan by the end of the plan year and operates consistently with the amendment.

PBA will update your plan effective 4/1/2021 unless you opt out of this change no later than 3/31/2021. Plan Clarifications will be sent for signature in the next few months.