What if I said there’s a program that will allow federal employees like you to set aside money for your health- and dependent-care expenses and help you to save on your taxes? You’d jump at the chance to sign up, right?
That’s exactly what the Federal Flexible Spending Account Program (FSAFEDS) will do for you. Money deducted from an employee’s pay into an FSA is not subject to payroll taxes, putting more money in your pocket. The Office of Personnel Management (OPM) says many FSAFEDS participants will see about a 30 percent drop in the federal taxes they would otherwise pay on the amount they have set aside in their FSA.
Yet, not many federal employees are taking advantage of this valuable benefit. Here are the most recent stats:
- 8 percent of the workforce has a health-care FSA
- 1 percent of federal employees have signed up for dependent-care FSAs
— 2016 Federal Employee Benefits Survey
It’s not too late. During the open season (Nov. 14-Dec. 12) you can get in on this benefit and start saving money in the new year. Curious about how much you may save? Do the math with these FSA savings calculators.
Here is some basic information. There are three types of FSAs available to federal employees:
- Health Care FSAs: A pre-tax benefit that allows you to set aside funds to cover eligible medical, dental, and vision care costs that aren’t covered by your health care plan or through other means.
- Limited Expense Health Care FSAs: This is for people who have qualified high-deductible health plans and Health Savings Accounts (HSA). A limited-expense FSA will help you save on eligible out-of-pocket dental and vision care expenses.
- Dependent Care FSAs: A pre-tax account you can use to pay for preschool, summer camp, before- or after- school programs, and child or adult daycare.
You can contribute as little as $100 annually up to $2,250 into both types of health-care accounts. You can also carry over up to $500 from one year to the next—a step the federal government is taking to increase participation.
For dependent-care accounts, the annual contribution maximum is $5,000 for married employees filing joint returns and $2,500 for single parents or married employees filing separately.
You can find more information about FSAFEDS here and here.
The National Treasury Employees Union fought hard to bring an FSA program into the federal community so that you and all federal employees can use it to save on your taxes and conveniently pay for medical and dependent-care expenses, as private-sector workers can.
NTEU is working with OPM to address some recent issues with an administrator change, but FSAFEDS is still a good way to save on taxes.
Explore this program, ask questions and sign up.
Tony Reardon is part of the GovLoop Featured Blogger program, where we feature blog posts by government voices from all across the country (and world!). To see more Featured Blogger posts, click here. The writer is National President of the National Treasury Employees Union, which represents 150,000 employees in 31 agencies.
“NTEU is working with OPM to address some recent issues with an administrator change” This was brutal, unannounced, and very last minute. Why they didn’t wait until the end of the year to change is beyond me. Basically went into “blackout” period for a month where my funds were locked up and inaccessible. Had to set up account from scratch after changeover and basically start again. Very poorly managed.
The Federal FSA is a good program. Many participants don’t understand the ends and outs of the program and how it works with their deductibles and/or out-of-pockets medical expenses. Can you collaborate on how the FSAs work in conjunction with the medical and dental deductibles and expenses? Give examples would be great.
You should make it clear:
“Health Care FSAs: A pre-tax benefit” lets you carry over a limited amount into just 2017 and none thereafter is what I have been told.
but high-deductible health plans contributions can be kept all your life and used for health care in your retirement, is what I have read in a financial magazine .. A much better deal for health expense planning which the health plans do not emphasize at all.
Most of my colleagues don’t use it – they’re find it mind-numbingly complex. And I don’t blame them. It sounds easy at first but first you get this lengthy list of “is/isn’t/may be covered if …” then you have to remember to ask doctors for prescriptions for OTC, etc. And you have to track reimbursements (ack) and, worse, if you let the insurance company claim for you, you have to track (which means you have to understand the (frequently impenetrable or sometimes intentionally nonsense) insurance company claims. I’ve had doctors send me bills months later (for example, lab work done by a 3rd party) so that the bills are out-of-date for FSAFeds. And FSAFeds sometimes rejects valid claims so you have to play this game of either guessing at providing an excessive explanation in advance or waiting for the rejection and then calling to explain. The people on the phone can sympathize and tell you that your claim sounds good but can’t do anything other than resubmit. And the web site (even the new one) sucks. For example, you have to log out to download a work sheet. It won’t show you who the provider is if the claim was initiated by insurance. Etc. Etc. It’s just horrible. Then at the end of the year (or whenever your money is about to disappear), you end up having to spend it even if you don’t need to. (Talk about wasted healthcare money.) Or you try to defer healthcare for next year that would be more appropriate this year to accommodate the FSAFeds budgeting requirements.
Companies such as Team Health use a system where a card is issued to participants and the cost for services is automatically deducted from their account. Why doesn’t the govt use this far more effective system?