Can I Enroll in an FSA Mid-Year?

Flexible Spending Accounts (FSAs) allow employees to set aside pre-tax money from their paycheck to pay for eligible out-of-pocket healthcare or dependent care expenses. Enrollment for these accounts typically occurs during an employer’s annual open enrollment period, where individuals select their contribution amount for the upcoming plan year. While these elections are generally set for the year, specific, limited circumstances exist under which mid-year enrollment or changes to an existing election are permitted. These exceptions are important for individuals whose financial or family situations change unexpectedly.

General Rules for Mid-Year FSA Enrollment

Employees generally cannot enroll in an FSA or alter their elected contribution amount mid-year outside of the annual open enrollment period. The Internal Revenue Service (IRS) recognizes that significant life changes can impact an individual’s benefit needs. These specific changes, known as “qualifying life events” (QLEs), provide the primary exception to the general rule. Experiencing a QLE allows for a special enrollment period, enabling individuals to make necessary adjustments to their FSA election. This flexibility ensures that FSAs remain a valuable benefit even when life circumstances change unexpectedly.

Common Qualifying Life Events

Common qualifying life events include changes in marital status, such as marriage, divorce, legal separation, or the death of a spouse. An increase or decrease in the number of dependents, through events like birth, adoption, or the death of a dependent, also permits a change. For Dependent Care FSAs (DCFSAs), a child turning age 13, making them no longer eligible for coverage, is a common QLE allowing for a decrease in contributions.

Changes in employment status for the employee, spouse, or a dependent can also trigger a QLE if it affects benefit coverage eligibility. This might include starting or terminating employment, changes in work hours, or returning from an unpaid leave of absence. Furthermore, a change in a dependent’s eligibility, such as a child reaching age 26 and no longer qualifying under a health plan, can also be a qualifying event. For Dependent Care FSAs specifically, a significant change in the cost of care or a change in the childcare provider can allow for an adjustment to the election. Other qualifying events can include a change in residence if it impacts eligibility for coverage or access to care, or gaining or losing eligibility for federal benefits like Medicare or Medicaid.

How to Enroll Mid-Year

Upon experiencing a qualifying life event, individuals must promptly notify their employer or human resources department to initiate a mid-year FSA change. This notification typically needs to occur within a specific timeframe, often 30 or 31 days from the date of the QLE. Some plans, however, may allow up to 60 days. Employers will usually require documentation to verify the qualifying life event, such as a marriage certificate, birth certificate, or official legal documents related to employment changes.

The requested change must directly relate to and be consistent with the qualifying event. For example, adding a new child to the family would make an increase in contributions for a Health Care FSA or Dependent Care FSA consistent with the event. The effective date of the change typically aligns with the qualifying event date, or the first day of the month following the election, depending on the plan’s terms. However, changes due to the birth or adoption of a child are often retroactive to the event date. It is always advisable to consult the specific plan documents provided by the employer for detailed requirements and deadlines.