Section 125 cafeteria plans are built on an awkward truth: people must choose before they know the year they’ll actually live. The IRS allows mid-year election changes only for specific events, and only if your plan document adopts those rules.
Events you’ll see most often
- Marriage, divorce, legal separation, birth, adoption
- Dependent gains or loses eligibility (aging out is the classic)
- Employee or spouse employment status changes that affect eligibility
- Significant cost or coverage changes (with narrower rules than people hope)
- HIPAA special enrollment events for group health coverage
- Certain Medicaid/CHIP or marketplace-related events, when the plan allows
An employee who simply “budgeted wrong” for their FSA is not, by itself, a change event. Neither is buyer’s remorse after a January dental surprise — unless an actual permitted event applies.
Consistency matters
The election change generally has to be consistent with the event. Having a baby can support increasing a health FSA; it doesn’t justify dropping dental for an unrelated reason and calling it parental leave magic.
Admin tips
- Put the event date, requested change, and effective date in one ticket record.
- Watch payroll effective dating — mid-month changes are where contribution math goes sideways.
- Dependent care FSAs have their own flavor of permitted elections; don’t assume medical FSA rules copy/paste.
Clear OE language (“elections are locked unless you have a qualifying event”) prevents half of these calls. The other half still needs a human who knows §1.125-4.