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If I change my Tax-Advantaged Spending Account contribution, how do I calculate how much will be deducted from each paycheck?
Note: This article is about making contribution changes to a Healthcare Flexible Spending Account (HCFSA), Limited Purpose Flexible Spending Account (LPFSA), and Dependent Care Flexible Spending Account (DCFSA). This article does not address contribution changes to Health Savings Accounts (HSA) and Commuter Reimbursement Accounts (CRA).
Read these articles if you're changing your HSA or CRA contribution:
Changing your contribution amount
You usually aren’t allowed to make changes to your contribution amount for an HCFSA, LPFSA, and DCFSA mid-plan year, outside of a Qualifying Life Event (QLE). However, due to the global COVID-19 pandemic, some carriers are allowing mid-plan year changes. To find out if the carrier of your HCFSA, LPFSA, or DCFSA is currently allowing changes and how to submit your change if applicable, contact the Customer Care team through Chat or email us at help@league.com..
Permitted changes that are submitted to League will be processed and reflected 1-2 pay periods following submission.
Calculating your paycheck deductions
When you update your Tax-Advantaged Spending Account contribution mid-plan year, we ask you to enter an annual amount. You can use this calculation to figure out how much money will be deducted from each paycheck.
1. Calculate the total amount you'll have contributed to the account this plan year up until your change comes into effect.
Example: Imagine you chose to contribute $1200 to a Tax-Advantaged Spending Account during open enrollment, and your plan year started January 1st. You get paid twice a month, so your current contribution per pay period is $50 ($1200 / 24 pay periods in the plan year).
On March 5th you change your contribution amount to $2400 and submit this change to League. Your per pay period contribution is still $50 until it updates on the last pay period in March (March 31st). Once your contribution amount updates, you've already contributed $250 ($50 x 5 pay periods).
2. Subtract this total amount from your new contribution amount.
Example: If you've contributed $250 to a Tax-Advantaged Spending Account so far and changed your contribution amount to $2400, the calculation would be: $2400 - $250 = $2150.
3. Calculate the number of pay periods remaining in your plan year, from the month your change comes into effect.
The amount of pay periods remaining will depend on:
Your employer's pay schedule
The date your benefits plan year ends
The date your changes come into effect
Example: Your plan year started on January 1st and ends December 31st. You get paid twice a month. You change your Tax-Advantaged Spending Account contribution amount on March 5th, and the amount is updated for the last pay period in March. From March 31st to December 31st, there are 19 pay periods remaining.
4. Divide the amount you calculated in step 2 by the number of remaining pay periods.
Example: $2150 / 19 pay periods = $113.16
For this example, the contribution per pay period will be $113.16.
Learn more
To learn more, read our resources about Tax-Advantaged Spending Accounts and how they work: