Q&A: Can We Change Dependent Care FSA Contributions Outside of OE?

May 24, 2024

Discover what options you have for changing dependent care FSA contributions outside of open enrollment. Including when changes are allowed and how to avoid over-contributing.

Q&A: Can We Change Dependent Care FSA Contributions Outside of OE?

I have a couple of questions about when employees are allowed to change how much they are contributing to a dependent care FSA outside of open enrollment.

One of our employees would like to discontinue his elections because a neighbor has offered to take care of his child at no cost. Another employee just realized her husband is also contributing to a dependent care FSA (DCFSA) through his employer, and she doesn’t want to over-contribute. Can I allow these changes?

The answer in both situations is yes. That is assuming your cafeteria plan document is written in such a way to allow the changes.

In the first scenario, where the neighbor has offered free childcare, the change would be allowed. But only if the plan document authorizes midyear election changes due to an increase or decrease in cost or coverage. It should be noted that the change would not be allowed if the new, free provider was a family member of the employee.

As to the second employee, whose husband is also contributing to a DCFSA, she can also discontinue her dependent care contributions. This is to avoid exceeding the annual $5,000 limit. In this situation, the IRS has suggested that employers obtain documentation from the employee of the spouse’s contributions.

I recommend you start by reviewing your cafeteria plan document. If you can’t tell whether it allows the changes described, the next best resource for answers would be to contact your cafeteria plan administrator. As your broker, The Miller Group is happy to facilitate that conversation if needed.

About The Author

Julie Athey, J.D.

Julie Athey, J.D.
Email As Director of Compliance & Legal, Benefits, Julie has more than 20 years of experience in compliance and law. Julie provides in-depth hands-on compliance training, advice and consulting for benefits and HR professionals. She has authored numerous manuals for HR professionals – including FMLA Compliance: Practical Solutions for HR and Wage and Hour Compliance: Practical Solutions for HR. Julie is also a frequent presenter at seminars, webinars and audio conferences on a variety of benefits, employment law and human resources topics.