Q.- May we allow an employee to change her Health FSA election without a life event?
A.- It is possible to allow an employee without a typical life event to change a Health FSA election.
In May, the IRS issued a notice expanding the permissible mid-year change events for cafeteria plans including health care and dependent care FSAs. An employer does not have to allow any of the new IRS-approved events, but may choose to do so.
Specifically, the following changes are permitted through the end of 2020 if the FSA is properly amended to allow the change.
- With respect to health flexible spending account plan participation, an employee may
- Revoke an election,
- Make a new election, or
- Decrease/increase an existing election
- With respect to dependent day care flexible spending account plan participation, an employee may
- Revoke an election,
- Make a new election, or
- Decrease/increase an existing election
An employer taking advantage of the mid-year election change expansion is not required to provide unlimited election changes and may instead implement only the permissive changes as it desires. If an employer wishes to adopt any of the new expanded mid-year election events, the employer must amend plan documents, implement the changes on a prospective basis, and administer changes in a non-discriminatory manner.
