Helping Federal Employees and Annuitants Understand Their Benefits

 

Federal Flexible Spending Account Program

FSAFEDS




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Under the IRS Code, annuitants (other than re-employed annuitants whose employment status is full-time) can not participate in an FSA. An FSA is a way to set aside part of your salary "before taxes" for payment of eligible expenses. An annuity is not considered salary.

If you're an employee who works for an Executive branch agency or an agency that has adopted the Federal Flexible Benefits Plan ("FedFlex"), you can elect to participate in the Federal Flexible Spending Account Program (FSAFEDS).

FSAFEDS allows you to save money for health care expenses with a Health Care or Limited Expense Health Care FSA. Think of it as a savings account that helps you pay for items that typically aren’t covered by your FEHB Plan, the Federal Employees Dental and Vision Insurance Program, or other health insurance coverage.

 FSAFEDS also offers an account for families with young children or elder care expenses – the Dependent Care FSA. This account allows you to set aside money to pay for your day care expenses.

Eligible employees can enroll in FSAFEDS each year during the Federal Benefits Open Season (the November/December timeframe).  Open Season enrollments are effective January 1 of the following year.  Current enrollees must remember to enroll each year to continue participating in FSAFEDS.  Enrollment does NOT carry forward year to year.

New and newly eligible employees who wish to enroll in this program must do so within 60 days after they become eligible, but before October 1 of the calendar year. For further information, visit www.FSAFEDS.com or call 1-877-372-3337. TTY 1-800-952-0450.

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Update

The Benefits Administration Letter (BAL) 14-801 announced that health care flexible spending accounts (FSAs) will no longer have grace periods.  Instead, participants are now able to carry over up to $550 of unused funds to the next plan year if they re-elect to continue participating.  

This is a significant change.  If the employee fails to re-elect participation in their Flexible spending account program there is no longer a grace period to incur the medical expenses.  If you don't re-elect the FSA (medical) there is no account in which to carry over the un-used funds.  Without the reelection, the employee will forfeit any money remaining in their account unless the expenses were incurred by 12/31 of the current year and claims are submitted by April 30 of the following year.

 
Take advantage of the FSA program this open season and don't forget to re-elect participation in the program. 

Health Care FSA (HCFSA)

A Health Care FSA (HCFSA) is a pre-tax benefit account that's used to pay for eligible medical, dental, and vision care expenses that are not covered by your health care plan or elsewhere. With an HCFSA, you use pre-tax dollars to pay for qualified out-of-pocket health care expenses.

The maximum amount you can allot to an HCFSA is $2,750 (per individual) for a benefit period and the minimum is $100. The total election amount is available on day one of your plan year. After you're enrolled, your funds are withdrawn automatically from each paycheck for deposit into your account before taxes are deducted. If you and your spouse are both active employees of an Executive Branch agency, or an agency, commission, or other federal entity that has adopted the HCFSA and are eligible for FEHB coverage, both individuals may enroll in an HCFSA and contribute up to the maximum of $2,750 each ($5,500 total).

 The money you contribute to an HCFSA is not subject to payroll taxes, so you end up paying less in taxes and taking home more of your paycheck. You decide how much to contribute to your HCFSA based on how much you plan to spend in the upcoming year on out-of-pocket medical, dental, and vision care expenses. Since the money allotted to your HCFSA is not subject to payroll taxes, you save an average of 30% on your eligible health care expenses. Use our savings calculator to find out how much you can save.

Important: An HCFSA cannot be used to pay for health insurance, life insurance, long term care insurance or any other insurance premiums, or costs for temporary continuation of coverage (TCC).

Dependent Care FSA (DCFSA)

A Dependent Care FSA (DCFSA) is a pre-tax benefit account used to pay for eligible dependent care services, such as preschool, summer day camp, before or after-school programs, and child or adult daycare. It's a smart and simple way to save money while taking care of your loved ones so that you can continue to work.

You can contribute to up to a maximum of: $2,500.00 per year if you are married and file a separate tax return, $5,000.00 per year if you are married and file a joint tax return or if you file as single or head of household **

With a DCFSA, you use pre-tax dollars to pay for qualified out-of-pocket dependent day care expenses. The money you contribute to a DCFSA is not subject to payroll taxes, so you end up paying less in taxes and taking home more of your paycheck. See Dependent Care FSA for more information.

 

 

Limited Expense Health Care FSA (LEX HCFSA)

Limited Expense Health Care FSA (LEX HCFSA) is a flexible spending account option if you are enrolled in a Federal Employees Health Benefits (FEHB) high-deductible health plan (HDHP) and have a Health Savings Account (HSA). This option is also available if your spouse is enrolled in a non-FEHB HDHP and has an HSA.

 IRS rules do not allow you to contribute to a Health Savings Account (HSA) if you are covered by any non-qualifying health plan, including a general-purpose Health Care FSA. By limiting FSA reimbursements to qualifying dental and vision care expenses, you and your spouse remain eligible to participate in both a LEX HCFSA and an HSA. Participating in both plans allows you to maximize your savings and tax benefits. The money you contribute to a LEX HCFSA is not subject to payroll taxes, so you pay less in taxes and take home more of your paycheck.

Eligibility

If you are eligible for the Federal Employees Health Benefits (FEHB) Program and are an active employee of the Executive Branch or of another agency that participates in FSAFEDS, you are eligible to participate in a health care FSA with FSAFEDS. You need only be eligible to participate in FEHB, you do not need to be currently enrolled.

There is no household limit on the amount of money that you can set aside for a HCFSA or LEX HCFSA, although the FSAFEDS limit per Federal employee is $2,750. If your spouse is not a "Fed", and has access to an FSA, he or she may enroll up to the maximum of his or her own company's health care account.

A LEX HCFSA is for employees enrolled in a Federal Employees Health Benefits (FEHB) Program High Deductible Health Plan (HDHP) with a Health Savings Account (HSA), or whose spouse is enrolled in a non-FEHB HDHP with an HSA. The LEX HCFSA is limited to eligible dental and vision expenses only. Under IRS rules, you are not eligible to contribute to an HSA and be enrolled in a FSAFEDS general purpose HCFSA at the same time. 

Under the IRS Code, annuitants (other than re-employed annuitants whose employment status is full-time) cannot participate in an FSA. An FSA is a way to set aside part of your salary "before taxes" for payment of eligible expenses. An annuity is not considered salary.

Enrollment

Eligible employees can enroll in FSAFEDS each year during the Federal Benefits Open Season (the November/December timeframe). Open Season enrollments are effective January 1 of the following year. Current enrollees must remember to enroll each year to continue participating in FSAFEDS. Enrollment does NOT carry forward year to year. 

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