Can You Change Your FSA Contribution? What to Know Before 2027

A flexible spending account (FSA) (opens in a new tab) is one of the easiest ways to lower your tax bill. Money comes out of your paycheck before taxes and goes toward healthcare or dependent care costs you were going to pay anyway. The catch is that an FSA isn't very flexible once you've made your choice since you can't just change your FSA contribution at any time. Election changes generally happen during open enrollment, with only a short list of exceptions during the year.

That makes your 2027 election super important to get right. The IRS raised the health FSA limit to $3,500 for plan years beginning in 2027 (up from $3,400 in 2026), and the dependent care FSA limit is now $7,500 per household after Congress raised it from the $5,000 cap that had been in place since 1986. Here's what you can change, when you can change it, and how to pick an amount you'll actually use.

An FSA is an employer-sponsored account funded with pre-tax payroll deductions. You choose an annual amount (your "election"), and your employer divides it evenly across each pay period for the plan year. You spend the money with an FSA debit card or by paying with your normal credit or debit card and submitting claims for reimbursement.

There are three main types, and each follows its own rules:

One key difference to keep in mind is that with a health FSA, your full annual election is available on the first day of the plan year, even though you haven't contributed it yet. With a dependent care FSA, you can only spend what's actually been deducted so far.

Usually not. FSAs are offered through Section 125 cafeteria plans, and IRS rules make your election irrevocable for the plan year. You can change your FSA contribution after open enrollment ends only if you experience a permitted election change event and your employer's plan allows changes for that event. Most plans also require you to request the change within a set window, commonly 30 days after the event. Once that window closes, you'll generally have to wait until the next open enrollment (opens in a new tab).

IRS regulations (Treas. Reg. §1.125-4) list the events a plan may recognize. The most common include:

• Marriage, divorce, legal separation, or the death of a spouse
• A change in your number of dependents, such as the birth, adoption, or placement for adoption of a child
• Death of a dependent
• A change in employment status for you, your spouse, or a dependent, such as starting or leaving a job, switching between full- and part-time, or taking unpaid leave
• A dependent gaining or losing eligibility, such as aging out of coverage
• A move that affects your eligibility for coverage
• A court order requiring coverage for a child
• Becoming entitled to (or losing) Medicare or Medicaid

Any change also has to pass the "consistency rule" which means it must be caused by the event and match it. Having a baby can justify increasing your health FSA election, for example, but it doesn't let you drop your election to zero for an unrelated reason.

Not necessarily. The IRS sets the outer limits, but employers aren't required to allow every permitted event. Some plans recognize fewer events, set shorter request deadlines, or cap contributions below the IRS maximum. Your plan document controls, so check it (or ask your HR benefits team) before assuming a change is allowed.

Health FSA elections are the most rigid. Changes are generally limited to the status events above, and a change in the cost of your health coverage elsewhere doesn't qualify. You also can't lower your health FSA election below what you've already been reimbursed for the year.

Dependent care FSAs (opens in a new tab) have more room to adjust because care costs change more often. In addition to status events, many plans allow changes when:

• You switch daycare providers
• Your provider raises or lowers rates (unless the provider is a relative)
• Your child's care needs change, such as starting kindergarten or summer camp
• Your work schedule changes the hours of care you need

As with health FSAs, the change has to match the event and follow your plan's terms.

An approved change only affects future paychecks. Say you elect $2,400 for the year, or $100 per paycheck over 24 pay periods. Six months in, you've contributed $1,200. If a qualifying event lets you lower your election to $1,800, your remaining 12 deductions drop to $50 each.

The $1,200 already deducted stays in your account. Lowering your election doesn't refund past contributions or reverse money you've already spent. And every reimbursement still requires an eligible expense and proper documentation.

Yes. Open enrollment is your main window to set or revise your 2027 election, and for calendar-year plans it usually runs in the fall. Two details trip people up:

• Your election from last year may not roll over: Many plans require you to actively re-enroll in an FSA every year.
• Higher IRS limits don't raise your election automatically: If you want to contribute the new $3,500 maximum, you have to choose it.

Every dollar you put in an FSA lowers your taxable income, so it skips federal income tax, Social Security and Medicare taxes (7.65%), and in most states, state income tax. If you're in the 22% federal tax bracket, a $2,000 health FSA election saves roughly $590 in federal and payroll taxes alone. That works out to a savings rate of about 30 cents on every dollar you contribute, and it's tax money that stays in your pocket. Your take-home pay falls by less than $2,000 because of those savings. To see the effect on each check, plug your election into a paycheck calculator or your employer's payroll tool.

• Start with predictable costs: Review your health plan's deductible and copay amounts, then add up expected copays, prescriptions, dental cleanings, glasses or contacts, and any procedures you've already scheduled.
• Check last year's actual spending: Your FSA or insurance claims history is a better guide than memory.
• Add health purchases only after eligibility is confirmed: Items like fitness equipment (opens in a new tab), saunas, or certain supplements (opens in a new tab) can be HSA/FSA eligible when they treat or help prevent a documented condition, but they often require a Letter of Medical Necessity (LMN) (opens in a new tab). HSA/FSA marketplaces and payments tools like Truemed (opens in a new tab) can help facilitate this process for qualified customers.
• Factor in carryover or a grace period: These reduce your risk of losing money (more below).
• Round down when unsure: It's easier to pay a few expenses out of pocket than to forfeit unused funds.

• Electing based on vague plans, like "I might finally get LASIK"
• Assuming your employer's limit matches the IRS limit
• Counting borderline purchases before eligibility is approved
• Forgetting to re-enroll during open enrollment
• Choosing a general-purpose health FSA when you plan to contribute to a health savings account, since that coverage makes you HSA-ineligible (see Can You Have an HSA and FSA at the Same Time? (opens in a new tab))

FSAs generally follow a use-it-or-lose-it rule: money you don't spend by the deadline is forfeited. How much risk you take on depends on which relief option your plan offers, if any:

• Carryover: Lets you roll a limited amount into the next plan year. You can carry up to $680 of unused 2026 funds into 2027 and up to $700 of unused 2027 funds into 2028.
• Grace period: Gives you up to two and a half extra months to spend the prior year's balance, for example, through March 15, 2028, for a 2027 calendar-year plan.

A health FSA can offer a carryover or a grace period, but not both, and some plans offer neither. Dependent care FSAs can't offer a carryover, though they may have a grace period. Don't confuse either one with a run-out period, which is extra time to submit claims for expenses you already incurred during the plan year.

Check your plan documents before choosing your 2027 amount. A plan with a $700 carryover gives you more cushion than a strict use-it-or-lose-it plan. For more on forfeiture rules, read What Happens to Unused FSA Funds? (opens in a new tab)

You can't change your FSA contribution at any time. Midyear changes require a qualifying life event, a change that matches it, and a plan that allows it. That makes open enrollment your best chance to set your 2027 election. Before you finalize it, review your plan documents, tally your predictable eligible expenses, and estimate your tax savings. A conservative election based on known spending will serve you better than an optimistic one. For more ways to make the most of your pre-tax dollars, explore The Ultimate Guide to HSA/FSA Eligible Expenses & Savings Strategies (opens in a new tab).