Spouse Job Change & Your Health Care FSA Election

Feb 23

Written by:
2/23/2012 8:55 AM  RssIcon

Participants can make mid-year election changes to their Health Care FSA due to a status change for the employee, their spouse or dependents. See Treas. Reg. §1.125-4. When a status change event occurs, such as a spouse gaining or losing employment or eligibility for their employer’s plan, our participant is allowed to make changes to their Health Care FSA that are on account of and consistent with the event.

When a participant’s spouse gains employment or becomes eligible for benefits, our participant can MAINTAIN, DECREASE, or DROP their Health Care FSA election – all of which would be consistent with their spouse gaining employment or becoming eligible for benefits.

When a participant’s spouse loses employment or loses eligibility for their employer’s plans, our participant can MAINTAIN or INCREASE their current election or ELECT a Health Care FSA – all of which would be consistent with their spouse losing employment or losing eligibility for benefits.

Here, our participant’s spouse gained employment, so the participant can maintain, decrease or drop her Health Care FSA election. She cannot increase her Health Care FSA election just because the benefits that her spouse has become eligible for happen to be more expensive. Additionally, the participant cannot increase her Health Care FSA election on account of a coverage change because cost or coverage changes do not trigger a permitted election change for the Health Care FSA.

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This Blog is made available by the authors and Employee Benefits Corporation for educational and general informational purposes only, not to provide legal advice. By using this Blog you understand that there is no attorney/client relationship between you and the Blog author.
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