As a rule, you can’t change your Flexible Saving Account (FSA) or Dependent Care FSA election amount during the calendar year unless you or your dependent(s) experience a Qualifying Life Event (QLE).
Changes in Status or Qualifying Events
The IRS determines what counts as a change in status or qualifying events.
They typically include:
- Change in marital status, such as marriage, divorce, or death of your spouse
- Change in the number of your dependents, such as birth or adoption of a child, or death of a dependent
- An event that causes your dependent to satisfy or cease to satisfy an eligibility requirement
- Change in residence for you, your spouse, or dependent
- Change in cost or coverage
- Change in child care/elder care provider or cost or coverage, such as a significant cost increase charged by your current daycare provider, or a change in your daycare provider. This applies to a Dependent Care Flexible Spending Account only.
- Change in employment status (for employee, spouse, or employee’s dependent) that affects eligibility for health insurance benefits
It’s important to note that if you leave your company, any money left unspent in your Dependent Care FSA generally stays with your company. But if you quit or are terminated from your job and you still have money left in your account, you may be able to spend down your account. Check with your benefits administrator about options for the remainder of your plan year.
Special Qualifying Event Circumstances
There are additional special circumstances that allow you to change your Dependent Care FSA election amount.
The most common of these is when a child or relative stops being a “qualifying child or relative,” as defined by the IRS. This occurs when:
- A qualifying child turns 13 and “ages out” of eligibility
- A qualifying relative regains his/her ability for self-care
If you or your dependents experience a QLE, you may enroll or change your current election(s) in the FSA Plan; however, your requested change must be consistent with the event that prompted the election change. For example, if you adopt a baby, you may want to increase your HCFSA and/or DCFSA elections to accommodate the added medical expenses and/or day care costs you may incur for this adopted child. However, in general, you could not decrease your DCFSA elections for that QLE. You may wish to decrease your DCFSA, for example, if your spouse decided to stay home with your child and you no longer had eligible day care costs.
If your requested change is due to the birth or adoption of a child, the change will be retroactive (in most case up to 60 days) to the child’s date of birth, date of adoption, or placement for adoption, consistent with the requirements of the Health Insurance Portability and Accountability Act of 1996 (HIPAA).