A flexible spending account, or "FSA", is an account that enables you to use pre-tax dollars to pay for non-reimbursible medical expenses. Accounts are funded by the benefit provider and reimbursed by you through regular payroll deductions. Flexible spending accounts involve a contractual agreement between you and the provider, and are subject to rules and regulations set by the IRS. Under normal circumstances, you cannot cancel an FSA within the calendar year in which it was started except during the annual open enrollment period.
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You may change your flexible spending account contributions if certain life events occur as described in your FSA plan information, but your provider may not allow you to cancel the plan completely. Life events include; death of an immediate family member, marriage, divorce, dependent change, spousal job loss and certain other qualifying events. Consult your FSA plan information for specifics or ask your human resource benefits manager if your qualifying event allows changes or cancellation.
If you retire, you would no longer be eligible for flexible spending account deductions and FSA benefits, but you would be able to use the balance of available funds up to the amount you have contributed. Your company's benefit manager would handle the cancellation for you upon retirement, and your provider would send you a statement of your account balance and further information as to how and when you must use available funds.
Job Loss or Income Change
If you lose your job, you would no longer qualify for deductions or FSA benefits but may still use available funds as usual, and your benefits manager would cancel your FSA upon your termination. If your income changes, you may be able to make contribution changes under a life event qualification but would probably not be able to cancel the account entirely.
If you go out on paid family leave, your flexible spending account would remain in effect as usual. If the reason for the leave qualifies as a life event, you may make changes to your contribution. If you are out on unpaid leave, your account would go into suspension mode and no contributions are made until you are back to work. If the leave is indefinite, your plan may allow you to cancel it in certain situations. As always, consulting your plan information or human resources will provide specific information on your particular flexible spending account.