A Health Care Flexible Spending Account is an optional benefit that enables service members to set aside up to $3,300 in pre-tax earnings to pay for health expenses such as co-pays and cost shares, vision, dental, and drug store items. (Pixabay)
Many service members may enroll in a tax-advantaged flexible spending account starting next year to help pay medical expenses not covered by Tricare, a Department of Defense spokesman told Stars and Stripes.
“A Health Care Flexible Spending Account is an optional benefit that enables service members to set aside up to $3,300 in pre-tax earnings to pay for health expenses such as co-pays and cost shares, vision, dental, and drug store items,” Joshua Wick wrote in a recent email.
Only active-component service members and Guard Reserve members on Title 10 orders are eligible to participate in the Health Care Flexible Spending Account and Dependent Care Flexible Spending Account programs, according to fsafeds.gov website.
Reserve members not on Title 10 orders and US Coast Guardsmen are not eligible for either program.
Uniformed service members may enroll during a special period March 3-31. Afterwards, first-year service members may enroll during the normal Federal Benefits Open Season that occurs mid-November to mid-December, Wick said.
One advocacy group is pleased that the department has extended flexible spending accounts to service members, but it has reservations.
For example, the accounts might justify increases to Tricare premiums, Karen Ruedisueli, health affairs director for the Military Officers Association of America, said by phone Monday.
“Sometimes in the civilian sector the pre-tax savings that are realized through flexible spending accounts are used to justify health plan cost increases, and we would be adamantly opposed to that,” she said. “I know a lot of families face significant out of pocket costs for things like orthodontics, glasses, contacts or noncovered services like LASIK, but we want to make sure that the flexible spending account isn’t used to justify increases in Tricare fees.”
Wick recommends eligible service members calculate how much they spend on out-of-pocket health care such as co-payments, vision or dental care for themselves and family over the course of a year.
“Service members who use an HCFSA can save on taxes while paying for these costs since using an HCFSA can lower their tax liability, or how much of their total earnings is subject to taxation,” he said.
If their calculations are off, service members may carry over up to $660 of unused funds in their flexible savings accounts into the next year if they re-enroll during the open season, he said.
“Service members can monitor the balance of their account and status of claims any time through the year using the FSAFEDS website or mobile app,” he said. “Participants who have unused funds totaling above $660 in the last three months of the year can assess whether they have HCFSA-eligible expenses to make and claim before the end of the year, and if they want to re-enroll to take advantage of the carry over.”
Don’t put more money in your flexible spending account than you think you’ll spend within a year, or risk losing anything above the carry over amount, according to healthcare.gov.
“We recommend that Service members make informed decisions, based on their individual and family needs, on whether and how to take advantage of this benefit,” Wick said. “The Department offers service members personal financial managers or counselors, as well as tax counselors, free of charge to help decide.”
