In mid-May 2020, the IRS made a revolutionary change in light of the public health crisis to open up the option for mid-year changes to FSAs and other insurance plans. In the past, the only times these mid-year changes were allowed were due to qualifying life events like marriage or the birth of a child, but with the COVID-19 pandemic resulting in a sea of changes with how consumers use their flexible spending accounts (FSAs), the option to pursue mid-year FSA changes is welcome and necessary.
Now a month removed from that big announcement, many FSA users are probably wondering: so when can I make changes to my contribution and coverage? Well here's the kicker: FSA mid-year changes are only available for account holders whose employers open them up for their employees.
With that information in mind, let's explore what employees should do next when inquiring about FSA mid-year changes
1. Talk with HR!
Your human resources department should be your first stop to inquire about any substantive changes in your company's benefits and whether there are any future plans to pursue mid-year changes for 2020. Ultimately, it's in your employer's hands to make this decision, but reminding them to weigh the pros and cons of allowing the change if they haven't done so already is the first step.
2. Talk with your FSA account administrator!
If you feel more comfortable, your FSA account administrator, whose information can typically be found on the back of your FSA card if one is available, is a great resource to talk with about your FSA related questions. They'll be able to tell you about your current plan options and any they're aware of, although they may ultimately refer you back to your HR department if your employer hasn't made a decision as of yet.
If mid-year changes are allowed…
If your employer did open up FSA mid-year changes to you and your fellow employees, you essentially have a mini open enrollment to prepare for. Here are a few things to keep in mind:
1. Should I contribute more or withdraw?
One of the unique aspects of these mid-year changes is that the IRS is allowing FSA users to either contribute more to their accounts to meet the 2020 contribution limit ($2,750) or withdraw these funds for personal use (post income taxes). We always err on the side of taking advantage of an FSA's tax benefits, but every person's financial situation is unique, so do what is best for your bottom line.
2. Should I elect a new FSA or drop my current one?
The IRS is also permitting those who had previously chosen to forego an FSA election for this year to elect one mid-year with these changes. If you have the option to add an FSA, now is a good time to explore the thousands of eligible products which will qualify and ways you may be able to save money and reduce your taxable income. And if you currently have an FSA and are considering dropping it under the changes, remember that if you can swing it, FSAs do reduce your taxable income, and there are still plenty of ways to responsibly use your FSA funds this year.
3. How can I estimate my future spending?
If you're stuck pondering your qualified healthcare spending for the rest of 2020, our FSA Calculator can help. This can help give you a full picture of your finances to plan out your future medical expenditures so you can accurately predict the right contribution for you and your dependents' needs.
It's an exciting time to be an FSA user, and you may have more flexibility with your account than you could have ever imagined! Now is the right time to start asking questions and finding out the benefits plans of your organization for the rest of 2020.
Thanks for visiting the FSA Learning Center! We'll keep you posted on all the FSA changes that may be coming in the foreseeable future, so be sure to to follow us on Facebook, Instagram and Twitter for the latest updates.
Life comes at you fast, and when there's a sudden change in your life for family or career reasons, taking a closer look at your finances is a key consideration when you're experiencing major life changes. However, as we've come to discover from a number of questions in our FSA Learning Center, when flexible spending account (FSA) users try to make alterations to their plans mid-year, they're surprised to find out that this can only be done during their Open Enrollment periods, or if they experience a Qualifying Life Event (QLE).
If an FSA user experiences a QLE, he/she will likely be able to enroll in a different health plan, or make changes to their current FSA account such as adding/removing dependents, changing yearly allocations and more. Here is a rundown of all the possible QLEs that could make you eligible for a Special Enrollment Period to make changes to your healthcare.
Types of Qualifying Life Events (QLEs)
QLEs fall into 4 basic categories that each have their own event subsets that could make an employee eligible for a Special Enrollment Period. Healthcare.gov has outlined the many possible QLEs that could afford you the opportunity to make changes to your healthcare benefits:
- Household Changes
- Marriage or divorce
- The birth or adoption of a child
- Death in the family
- Loss of Health Coverage
- A loss of health coverage (including job-based, individual and student plans) for any reason except not paying one's premiums
- A loss of eligibility for Medicare, Medicaid or CHIP
- Reaching the age of 26 and being removed from a parent's healthcare plan
- Change in Residence
- Moving to a different zip code or state county
- Students moving to/from where they attend school
- Seasonal workers moving to and from working location
- Moving to/from a shelter or transitional housing
- Other Possible QLEs
In addition to traditional life changes, there are other special instances when a Special Enrollment Period could be granted:
- Attaining U.S. citizenship
- Changes in income due that affect healthcare coverage(or becoming eligible for specific healthcare tax credits)
- Leaving jail or prison
- Becoming eligible for Medicaid
- Gaining membership in a federally recognized tribe
What should I do if I experience a QLE?
When one of these events takes place or is upcoming, you should speak with your FSAadministrator within 30 days of the event to make any necessary and allowed changes. It's important to rememberthat not all employers will offer mid-year changes to FSAs, so speaking with your benefits administratorabout the regulations surrounding your account will help you avoid potential issues.
To learn more about your FSA and spend down your yearly allocations, rely on FSAstore.com! We have the web's largest selection of FSA eligible products to help you maximize the potential of your healthcare benefits.