The IRS rules that allow mid-year changes in a Health Care FSA are much more restrictive than otherwise permitted for enrollment under a pre-tax health insurance plan or a Dependent Care FSA. While you may be allowed to make changes to other coverage options under some of the situations listed below, changes to your Health Care FSA are not permissible if:
- You move inside or outside of an HMO service area and change your health plan option.
- Your annual earnings decrease due to a change in your appointment percentage or other job change, and you still remain eligible to participate in the university’s Health Care FSA.
- Your anticipated health/dental/visions costs increase or decrease due to unanticipated factors. Some examples include the following situations:
- You funded your FSA with an expectation of having LASIK eye surgery and were advised you were not a good candidate for surgery.
- You funded your FSA with an expectation of having extensive dental work done. Schedule issues by your dentist’s office resulted in the needed work to be carried over several months, and all of the work could not be completed before the end of the plan year.
- You funded your FSA with an expectation of having limited out-of-pocket expenses for the year. Midway through the year, your dependent required outpatient mental health treatment that was only partially covered by your health plan, resulting in significant out-of-pocket expenses.
- You funded your FSA with an expectation of continued use of a particular prescription drug at a fixed co-pay, amount. Your physician determined it was necessary to change the medication to a drug with a higher co-pay, or your condition improved and you no longer needed to take the drug.
These are only a few examples, but the IRS has ruled that the employee’s intent when signing up for a Health Care FSA is not relevant. The Health Care FSA remains available to reimburse other out-of-pocket medical expenses and a mid-year change is not allowed under these circumstances. Please keep this in mind when deciding how much to contribute to a Health Care FSA. You forfeit any contributions you cannot claim.
The following information lists permissible events that allow you to make a mid-year change in your Health Care FSA and the corresponding election change that may be made. You must notify Benefits Support at 888-659-3616 within 30 days of the event and be prepared to provide documentation of the change within 30 days of the event:
- Change in Your Legal Marital Status by marriag