Dependent Care FSA - Eligible Mid Year Change

[Guest sgb]

I received a request from an employee to cease Dependent Care FSA contributions because a relative will now be caring for her child and she will not be incurring day care fees.

Is this an eligible change? According to the final regs it may not be since the cost change was not "imposed by a dependent care provider who is not a relative of the employee"?

I'd appreciate your opinions on this.

[papogi]

This is an allowable reason to cease a DCFSA. The regs don't want to allow employees to change their DCFSA election if they are using a family member as a provider and the family member changes the fees. Your case involves an employee whose DC provider has changed, and this is the qualifying reason for the change to the DC election.

[Jbentz]

I have not heard that changing a DC provider is a qualifiying reason to change the DC election. Papogi, can you tell me more? Where in the regs is it, etc...? I am curious. Thank you for your insight.

[papogi]

The concept is the same as a new benefit package option becoming available, that's why the change is allowed. It can be found in the 2001 Change to Final Section 125 Regulations, issued January 10, 2001 [(1.125-4(f)(6)EXAMPLE 5]. You can find it here: