Can I Cancel My Flexible Spending Account in the Middle of the Year?

Your employer-sponsored flexible spending account lets you contribute to your healthcare or dependent care expense accounts with pretax money. To make changes to your account, you must normally wait until open enrollment, which is the time frame prior to the start of the plan year to enroll in the program. You cannot make mid-year changes, including canceling your account, unless you experience a qualifying event.

Plan Year

Employers are allowed to set any 12-month period as a plan year for purposes of funding a flexible spending account. There usually will be an open enrollment period before the start of the 12-month period, during which you can make changes to your flexible spending account . However, once the year starts, you can't cancel your flexible spending account at any time during the plan year unless you have a qualifying event.

Qualifying Event

Qualifying events under IRS guidelines include if your marital status changes, your spouse or dependent dies, your spouse obtains or loses her job, you gain or adopt a child and you or your spouse’s employment status changes, such as from full time to part time. Changes in dependent care providers or cost, unpaid leave taken under the Family Medical Leave Act and loss of or eligibility for Medicare or Medicaid are also qualifying events. You must cancel your account within 30 days of the qualifying event.

Employment Termination

Your payroll deductions to your flexible spending account stop if your employment terminates while you are still enrolled in the program. Under IRS rules, you forfeit any unused money that is left in your account after your employment ends. You may, however, make reimbursement claims for expenses that were incurred while you were employed up until the plan year ends.

Cancellation Procedure

To cancel your account, consult your payroll or human resources department. Whether the change happens during or outside of open enrollment, employees must generally fill out a form to make changes to their account. If you have a qualifying event, be prepared to show documentation of the change upon request.

About the Author

Grace Ferguson has been writing professionally since 2009. With 10 years of experience in employee benefits and payroll administration, Ferguson has written extensively on topics relating to employment and finance. A research writer as well, she has been published in The Sage Encyclopedia and Mission Bell Media.

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