Can I change my Flexible Spending Account election mid-year?

Can I change my Flexible Spending Account election mid-year?
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  • In general, once the plan year has started an election may not be changed unless there is a status change event.
    Status change events as defined by the IRS include:
    * Change in legal marital status
    * Judgments, decree or court order
    * Entitlement or loss of Medicare or Medicaid
    * Dependent satisfies or ceases to satisfy eligibility requirements
    * Special requirements related to Family Medical Leave Act (FMLA)
    * Entitlement to COBRA
    * Change in employment status
    * HIPAA Special Enrollment Rights
    * Change in residence that affects eligibility for coverage

    There are special exceptions for making mid year election changes for Dependent Care FSA accounts as well as Qualified Transit and Parking Accounts.
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  • Hi Jim,

    I have a follow up question to your reply above relating to status change event concerning "Special requirements related to Family Medical Leave Act (FMLA)." Specifically, does this relate to pregnancy?

    For example:

    -Nominal election for 2012.
    -In Early 2012 I find out that I am pregnant with a 2012 estimated due date.
    Based on this example, will I be able to increase my 2012 election amount upon confirmation of pregnancy?

    Thank you in advance.
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  • Great question!

    Being pregnant is not considered a status change by the IRS. Once you actually give birth you have a status change and can increase your FSA election.

    If you went on FMLA prior to the pregnancy you still could not change your election until you actually gave birth to a child.
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  • Hi Jim,

    One additional question on this topic thread: does an employment change include a spouses employment status change? For example, I have the flex spending account, but if my husband quits his job to stay home, can I stop the flex spending plan?

    Thanks!
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  • Two part answer to your question:

    1) If the change in employment status of your spouse results in a loss of eligibility under their employer's Plan then that is considered a change in status. For example, if your spouse had health insurance or an FSA through his employer and then quits and loses his coverage then that is a status change. If your spouse did not have any coverage through his employer and then quits that would not be considered a status change.

    2) When a change of status occurs the election change you want to make has to be consistent with the status change. For example, if you gain a dependent it is consistent that you would increase your Medical FSA election, not decrease your election. In this example where your spouse loses coverage it would be consistent that you would enroll or increase your FSA election but not that you would stop contributing.

    Does that help?
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  • Hi Jim, I just realized recently that the enrollment of my FSA was wrong as I supposed to elect dependent care FSA, which was what I have done for last 4 years but instead, health care FSA was elected. I don't know if it's a system issue (which I don't have any proof at this point), or I made the mistake when filed out the form online. I am wondering if there is any way I can stop the contribution now as I won't be able to spend any money in my health care FSA and I don't want to lose the money at the end of this year.

    thank you in advance!
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  • Hi Sean - Contact your human resource/benefit department and based on the facts and circumstances it sounds like they could allow you to change your election from a Medical FSA to a Dependent Care FSA with the same annual election amount.

    Catching the error early in the year is important so contact your HR/Benefit team now and if you run into any problems please call us at 303-369-7886.
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  • Jim - if an employee has their hours reduced due to medical reasons, but they are still paying the part-time insurance premiums, can they increase their FSA annual election mid-year to help cover those premiums?
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  • Hi Laurie - Assuming you are talking about a Medical FSA that isn't possible because you cannot pay for insurance premiums with a Medical FSA. Typically, when you have a reduction in hours that causes you to lose medical coverage you also lose the ability to participate in a Medical FSA (may not be true at your employer).

    If this isn't your situation please email us at info@24hourflex.com with more of your specific details and our customer service team will help you.
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  • I have a question about FSA. When we originally did our enrollment I elected FSA. Our company was purchased and now the new owner is looking at switching our healthcare provider, payroll, etc. If they switch to a new company how does that change my current FSA account?
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  • Hi Amy - Typically a change in providers does not impact your current year's FSA election as the election will be transferred to the new provider. Often times there will be a "blackout period' where you cannot submit claims or use funds from the old provider while the information is being transferred to the new one.

    We have seen cases where a plan was terminated mid year and then a new one started (giving employees a chance to make a new election) but that is rare and is usually a part of one company acquiring another company.

    The best thing to do is to ask your Human Resource and/or Benefit department how the new vendor is going to impact your current year's election.
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  • Thank you for your reply. I really can't call and ask yet. Our new owner is looking from switching to the PEO (Professional Employer Organization) that we currently have to another Payroll company completely. So the company that had administered our payroll, benefits, etc will change. That's why I asked. We will terminate that mid year and start with a new company/insurance. I know it's a different type of issue.
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  • Ok, that makes sense.

    When switching from a PEO your FSA balances often does not transfer to the new provider but it can, depending on how your contract with the PEO is worded and depending on what your employer negotiates with the PEO.

    Sorry I can't give you a more definitive answer without knowing the specific details (and it doesn't sound like those are even figured out yet).
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  • Hi I have a question. My wife and I both elected to contribute $5000 each to Dependent Care FSA. We work in different companies. I just found out from researching that each household can only contribute up to $5000.
    Is there a way to stop the contribution or allocate some to Health Care FSA?
    We dont want to lose $5000
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  • You aren't the first person to run into this situation and we are glad you discovered the problem early in the year!

    You should talk with your Human Resource department about making a reduction in your Dependent Care election that will bring both of your elections within the allowed limit of $5,000.

    You are not able to convert funding to a Medical FSA but you can prospectively reduce your election in this scenario.
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  • Jim,
    One more scenario of you don't mind.

    I have insurance through my work and cover the children.
    My wife has coverage through her employer, and recently got a new job where she is now covering her, myself and the kids (because the benefits are FAR better and cheaper)

    I need to cancel my medical insurance and would like to also cancel the FSA contribution because I will no longer need the amount I am currently withholding.

    Can I do this?

    Thank you in advance for any advice
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  • Yes, in the scenario you described you should be able to stop making contributions to your Medical FSA (or decrease your election) but you should verify with Human Resource/Benefits department and/or read your Summary Plan Description (SPD) to verify.

    The logic is that your wife gained eligibility under her new employer's plan which most likely changes/decreases your health costs.

    Any funds you have contributed up to the point you make the change will still have to be spent on eligible medical expenses. Most employers have a 30 day window in which you need to notify them of a qualifying status change as well.
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  • This reply was removed on 2013-05-16.
    see the change log
  • You replied earlier that pregnancy is not considered a change in status. My wife is a flight attendant and will reach a point where she cannot fly and will be considered on disability (maternity) and not FMLA. Would this disability be considered a change in status?
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  • Hi Doug,

    That doesn't sound like a change in status either unless she is no longer eligible to participate in the plan (which I don't think is likely for maternity leave).

    If she loses coverage under her benefits as a result (again, I don't think that is very likely) then you would be able to increase your FSA election. If you'd like more detailed information please call us at 303-369-7886 x 5 and ask for Jim.
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  • This reply was removed on 2014-01-02.
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  • Hello, We concluded our annual open enrollment process on 12/15 and mailed confirmation statements to all employees asking to make any corrections no later than 12/31. It is no January 14 and an employee wants to change their FSA election. Is a change permissible at this point or does the employee need a qualifying event? Our payroll is run monthly and there has been no deductions from the employees paycheck.
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  • Hi Gabe - As of January 1st that employee's election was in place for the year and they typically would not be allowed to change their election unless they experienced a qualifying status change (it does not matter that the first deduction has not occurred as the FSA balance was available as of 1/1).

    That being said, if there was any type of administrative error made there is room to correct the error. For example, if the dollar amount was entered incorrectly, the form wasn't readable and the incorrect amount was entered, etc., a change could be made. The key is make sure if you make an adjustment it is because there was an error and not simply because the employee has changed their mind about the election amount.
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  • hi
    My wife had opted for health care fsa to pay for medical expenses for the birth of child/pregnancy related doctor visits/tests etc.
    Now unfortunately, she has miscarried and not sure if will be able to use the contributions towards the fsa. Does this qualify to reduce the FSA contributions?
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  • Hi CC,

    I am very sorry to hear that you lost your baby. Unfortunately that doesn't qualify as a change in status under current IRS rules. If you need help with ideas on how to spend the dollars please give us a call at 303-369-7886 and ask for Jim and I'll help in any way that I can.
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  • Hi. My wife is pregnant and though I thought I had signed up for FSA, my employer doesnt have it recorded! The baby is due in June and I understand I can sign up then because of the life changing event. However, would we be able to use those FSA funds for any monies we would owe the hospital for the delivery as it is prior to the life changing event? Thanks!
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  • My husband changed employers in September and he had always carried our traditional insurance plan and I had money going into Medical FSA to cover deductibles and glasses. When he switched my employer had the better healthcare plan and so given it was a qualifying event I now carry the insurance with a HIgh deductible plan and an HSA. Can I roll my left over medical fsa dollars into my new HSA account? I did not incur enough medical expenses prior to the change date and now I am looking at losing approximately $1500 dollars.
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  • Hi Malissa - Great question and unfortunately there isn't a way to do what you are asking. Do make sure you submitted all of the medical, dental, vision, prescription, and other expenses to your FSA provider so you can get reimbursed for them. You can also get reimbursed for mileage driven for medical reasons so make sure you've taken advantage of that as well.
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  • Hi Jim,
    I am hoping you can help me answer my question. I am about to loose quite a bit of cash if i dont come up with a solution.

    I will try to summarize the issue in this email. I joined a Company on Aug 26th and as part of the employee orientation process I signed up for a day care FSA for my four year old son who was going to day care. The annual limit was $5000. In December of 2014 my wife had to go to Pakistan to take care of her parents, they weren’t doing very well. So she along with the kids (by this time our second child has been born) left for Pakistan for 6 months. They will be back in April. Since my son is no longer in the US, I cannot use the money in the Day Care FSA anymore and I am told that I would lose all the money in the account if I don’t use it my march 2015.

    So I contacted the benefits department and they said that the since your kid is not in the US, this qualifies as an event that does allow you to make changes to your Day Care FSA account but you are late in informing us. My family left on Dec 9th 2014 and I was late informing the Benefits department since I informed them on Jan 17th I believe. They said that since I was late they can no longer make changes to the Day care FSA but that I can appeal. So they sent me a form of claim/appeal which I sent them via mail as instructed in the form. I sent the appeals form Jan 27th. I called the benefits department yesterday but they have no update on the appeal and they said that it is now between myself and the Company and that I would hear back from them via email within 90 days. In the mean time I am having the Day Care FSA contribution still being deducted from my paycheck twice a month.

    I am reaching out to you in hope that you may help me in this regard and if possible provide me a way out. I support a family of 4 and by having about $2300 of my earned income go to waste would cause some severe hardship on my family.

    Thanks for listening
    ND
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  • Hi Naveed,

    It does sound like you are difficult situation based on the facts and circumstances you are describing. There are additional details we would need in order to determine if you have any other options including what your company's plan year is. Please email me directly (jim at 24hourflex dot com) and I will try to help you.
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  • Hello Jim,

    My wife has an FSA through her work that we minimally began funding last year. I just started a new job this past month and signed up for an HSA through my work with the understanding that I would be able to terminate my wife's FSA since I understood this to be a QLE. When I signed up for the HSA, one of the qualifying questions asked if my spouse had an FSA. If so, I could not enroll in the HSA. Upon contacting her FSA provider, they are saying she cannot stop her FSA. This may in effect keep myself and our daughter from enrolling in the HSA. Are they able to do this?

    Thank you.

    Greg
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  • Hi Greg,

    There are two different scenarios here:

    Scenario a) If you took a new job and gained coverage under a new plan that will cover your wife (as in you added her to your new insurance) she should be able to drop/revoke her Medical FSA election as of the start date of the new plan (assuming she notifies her plan in a timely manner). This assumes your wife's Medical FSA Plan Document allows for the "Change in employment status of employee, spouse or dependents that affects eligibility" change of status.

    Scenario b) If your wife is not covered under your new plan then she would not be allowed to change her Medical FSA election. 

    If you are stuck in scenario b or your wife's provider wont' allow the change still please email me jim at 24hourflex.com and I can provide a few more options.
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  • Thank you Jim... believe I am stuck in "b". She will continue to be covered by her employer. From what I have experienced, many places now are not letting spouse A switch over to spouse B's plan if spouse A's employer offers health insurance. That said, both my daughter and I will be covered under the new plan the first of the month. I was hoping to do the high-deductible HSA plan (and have actually already enrolled), so any thoughts/options appreciated. Thanks again,

    Greg
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  • Hi Jim,

    I accidently chose my FSA as dependent care instead of medical care. I am in jeopardy of losing $1000 and was wondering if there was any way to change my election. This was for 2014 and we just discovered the error when trying to submit expenses. My HR department says that they cannot change the coverage now. it was an honest mistake and I am wondering if there is any way for me to get my $1000 back.
    Thanks, Kevin
    • Hi Kevin,

      Depending on the facts and circumstances these types of errors might be correctable if caught early in the year. If, for example, you do not have anyone who is age 12 or younger who is even eligible to be covered by dependent care dollars you would have a case to get the mistake corrected. Once the error has gone on for an entire plan year (or past the plan year as in this case) it is difficult to make an argument for retroactively correcting it.

      I wish I had better news for you and thanks for asking the question!
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  • I’m frustrated
    Hello Jim,
    I just became eligible through my employer for health coverage and chose the CDHP plan with HSA (employer contributes $600 this year and $900 for each there after plus I can contribute which I elected to do so). My problem is I was covered under my spouses regular PPO plan and FSA up to this point and though he dropped me from his health plan the same day I enrolled, I just stumbled upon the HSA/FSA rules saying I can't contribute if I was on a spouses FSA plan. My question is: Does his dropping me from his health plan autocratically drop me from his FSA and will I be able to have and contribute to an HSA now? I'm so confused and gotta say upset employers don't cover this isssue at benefits meeting. Any help would be a blessing!
    Thanks, Kristie
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  • Hi Kristie,

    Sorry for my delayed response. What you've run into is a frustrating aspect of FSA/HSA interaction and something we are working with the IRS and Congress to fix (hopefully). If you'd like to email me directly I can offer some additional advice for your specific situation (jim at 24hourflex.com)
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  • Hi Jim, thank you for this wonderful resource;

    I have been working for my employer full time and used our companies FSA for years. I am enrolled this year, but because of business forecasts, I have been cut from a 40 hour week to a 30 hour week. Bringing home one quarter less pay will make funding the account more difficult. Is being changed from full time to part time a life changing event that would allow me to drop my FSA? I have not submitted any claims yet.

    Thank you.
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  • Hi Greg, you are very welcome.

    A reduction in hours could be a life changing event allowing you drop your Medical FSA if employees working 30 hours per week are not eligible for the Medical FSA or other group health benefits. If you are eligible for all of the same benefits the reduction in hours would not make you eligible to drop your FSA.

    We've created an google spreadsheet that documents the Change of Status Scenarios and their impact on employee benefits being paid pre-tax (which may be more information than you are looking for but it may be helpful for others). Let me know if you have any follow up questions and best of luck to you!
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  • Jim
    If an employer increases the amount they charge employees for coverage mid-year, is the employee allowed to change the amount of their medical FSA election? I have looked at your Change of Status Scenarios spreadsheet, and it looks as though that is not allowed; however, under the examples column you say if the change is "significant", it might be. Is that only true for the dependent FSA and never for the medical FSA? Or can you change the Medical FSA under certain scenarios?
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  • Hi Jim,
    I contributed too much money to my Health FSA, I didn't realize my deductible applied to my out of pocket maximum. I'm pregnant and expecting to deliver 11/11. At that point, am I allowed to decrease or stop contributions as birth is a life event?
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