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Can I increase or decrease my FSA election after a Qualifying Life Event (QLE)?

  • Updated

Yes—the IRS allows you to make changes to your pre-tax benefit elections (like FSA or dependent care) if you experience a Qualifying Life Event (QLE). However, there are a few important rules to understand about when and how you can adjust your election amount.

Two Rules for Changing Your Election

Because FSA benefits are offered under the Section 125 plan, FSA elections are subject to the Irrevocable Election Rule. Under that rule, FSA elections made during open enrollment cannot be changed during the plan year unless you experiences a QLE.

To make a change, both of the following must apply:

  1. You experienced a QLE, such as marriage, divorce, birth/adoption of a child, or a change in employment.
  2. The change you request must be consistent with the QLE.

Examples:

  • If you have a child, you may increase your election to account for new dependent care or medical expenses. Or, you may decrease your election if you become eligible for and enroll in coverage under your spouse’s plan.
  • If you get divorced, you may decrease your election, since your spouse is no longer a dependent. Or, you may increase your election if you lose coverage under your ex-spouse’s plan.

The IRS allows either an increase or a decrease, but it must directly relate to your life event.

What if I Want to Decrease My Election Mid-Year?

There’s an important restriction to keep in mind:

📌 You cannot decrease your election to less than the amount you’ve already spent.

For example:

  • If you’ve spent $3,000 year-to-date but only contributed $2,000, you cannot reduce your election to below $3,000 even if you experience a QLE.
  • This rule protects employers from potential financial loss and is built into Forma's plan documentation.

What Happens If I Spend More Than I’ve Contributed, Then Change My Election?

If you're still eligible for the plan (e.g., you haven’t left your job), the rule above applies: you can only decrease your election down to the amount you've already spent.

However, if you terminate employment or lose eligibility before fully contributing your elected amount:

  • You won’t be required to pay back any difference between what you’ve spent and what you contributed.
  • This is an inherent risk of offering an FSA—it can work in favor of either the employee or the employer depending on the situation.

Summary

  • You can increase or decrease your FSA election after a QLE, as long as the change is consistent with the event.
  • You can’t decrease your election below the amount you’ve already spent.
  • If you leave your job, you won’t be required to repay any difference between what you've spent and what you've contributed.

Still have questions? Contact your HR team or Forma Support for help navigating QLE-related changes.

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