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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