FSAFEDS: Flexible Spending Accounts for Federal Employees

The FSAFEDS program is a valuable benefit that allows eligible employees to reduce their out-of-pocket expenses for everyday health and dependent care expenses and stretch their hard earned dollars.
Eligible employees reduce their out-of-pocket costs by opening a health and/or a dependent care Flexible Spending Account (FSA). FSAs are tax-favored accounts that employers, including the federal government, offer under Section 125 of the Internal Revenue Code. This section allows qualified health and dependent care expenses to be funded with pre-tax dollars via FSAs.

What is a Flexible Spending Account?

A Flexible Spending Account (FSA) is a tax-favored program offered by employers that allows their employees to pay for eligible out-of-pocket health care and dependent care expenses with pre-tax dollars. By using pre-tax dollars to pay for eligible health care and dependent care expenses, an FSA gives you an immediate discount on these expenses that equals the taxes you would otherwise pay on that money.

In other words, with an FSA, you can both reduce your taxes and get more for your money by saving from 20% to more than 40% you would normally pay for out-of-pocket health care and dependent care expenses with after-tax (as opposed to taxed) dollars.

FSAFEDS offers three types of FSAs:

  • The Health Care Flexible Spending Account (HCFSA), which can be used to pay for qualified medical costs and health care expenses that are not paid by your Federal Employees Health Benefits (FEHB) plan or any other insurance. PLEASE NOTE: A HCFSA cannot be used to pay for any type of insurance premiums, including long-term care insurance premiums.
  • The Limited Expense Health Care Flexible Spending Account (LEX HCFSA), only available to employees who enroll in a Federal Employees Health Benefits (FEHB) Program or under a High Deductible Health Plan (HDHP) with a Health Savings Account (HSA) . Eligible expenses are limited to dental and vision care services/products that meet the IRS definition of medical care. By using a LEX HCFSA, you can preserve the funds in your Health Savings Account to use/save for other purposes.
  • The Dependent Care Flexible Spending Account (DCFSA), used to pay for eligible dependent care expenses such as child care for children under age 13 or children who are physically or mentally incapable of self-care and, in some cases, elder care, so that you (and your spouse, if you are married) can work, look for work, or attend school full-time.

Complete details on the FSAFEDS program can be viewed at: http://www.fsafeds.com