Love is in the air and wedding season is in full swing. It’s a time of celebration and happiness for many people – let the good times roll! But wait – don’t forget the necessary practical changes that need to be made during these happy life events. Getting married should prompt you to review your benefits and determine any necessary changes you need to make, including a special opportunity to change your FSA election.
Yes, there are some situations that allow you to change your FSA contribution outside of Open Enrollment.
A life event or a change in status – like marriage, birth of a child, or divorce – are all special circumstances when you are permitted to change your FSA election amount, regardless of where you are in your plan year. Normally, IRS regulations state that FSA participants are unable to change their FSA elections and must wait to make any changes during Open Enrollment – unless you experience a qualifying life event. A change in status includes the following:
- Change in legal status – i.e. marriage, divorce, legal separation or annulment, death of your spouse
- Change in the number of your dependents due to events such as birth, adoption, placement for adoption or death
- A termination or commencement of employment by your spouse or dependent
- A reduction or increase in the hours that you, your spouse or your dependents work, including a switch between part-time and full-time status and commencement or return from an unpaid leave of absence
- An event that causes your dependent to satisfy or cease to satisfy the eligibility requirements for a certain benefit
- A change in the place where you, your spouse or your dependent work or reside (Dependent Care FSA)
(For a full outline of what constitutes a change in status, please refer to your company’s Summary Plan Description (SPD), usually available through your HR department or in your benefits package.)
If you experience a change in status, the changes you make to your FSA must be consistent with the change in status. For example, if you have a child, you can increase your contribution to your FSA, but you cannot decrease it. However, the IRS does not allow you to change your election below the amount you’ve already been reimbursed for the plan year. Let’s say you enroll in the Health FSA for $2,000, and you’ve already spent $1,000 from your account. Your husband changes jobs and you want to lower your election amount. You cannot lower your election amount below what you’ve already spent, or in this case, $1,000.
Remember: when you change your FSA election, it must be consistent with the change in status only if the change in status results in you, your spouse or dependent gaining or losing eligibility for a benefit under your employer’s plan, or under your spouse/dependent’s employer plan. If you want to make changes to your FSA election, you must notify your employer, who will notify the administrator/company who oversees your FSA plan (like P&A Group). Your employer has 30 days to notify the administrator of your change in status event.
So, when the wedding cake is gone and the dancing has quieted down, take a moment to sit down with your partner and review all of your important benefit decisions together.