Flexible Spending Accounts
The Federal Flexible Spending Account Program (FSAFEDS) is sponsored by the U.S. Office of Personnel Management (OPM), but is administered by a third party. DCPAS updates Components and agencies on significant program changes, addresses inquiries from HR Practitioners, and reviews program participation data.
FSAFEDS offers an estimated 30% tax savings on out-of-pocket medical and dependent care expenses through premium conversion. The Internal Revenue Service sets the maximum contribution and carry over levels each year. Unlike the Federal Employees Health Benefits and Federal Employees Dental and Vision Insurance Programs, employees must re-enroll in FSAFEDS each year to participate.
There are three FSAs – Dependent Care FSA (DCFSA), Health Care FSA (HCFSA), and Limited Expense Health Care Flexible Spending Account (LEX HCFSA). Generally, DCFSA covers eligible daycare expenses for children under 13 or elder dependents. Review Benefits Administration Letter 21-802 for information on expanded flexibilities for plan year 2020 and 2021. HCFSA covers eligible medical, dental, and vision expenses. The LEX HCFSA is only available to employees who have an HSA-qualified high-deductible health plan (HDHP) and a Health Savings Account (HSA). Under LEX HCFSA, qualifying expenses are limited to dental and vision care expenses. This is a “use or lose” benefit, which means that money left in the FSA that exceeds the carry-over limit is forfeited after the benefit period ends. The HCFSA and LEX HCFSA allow for carry over; however, the participant must re-enroll to take advantage of the carry over provision.
Effective January 2021, Health Equity is the new third-party administrator, and the FSAFEDS billing process changed to a task order process. Details are outlined in Benefits Administration Letter 21-801, "Announcing New Third-Party Administrator and Billing Requirements for The Flexible Spending Account Program (FSAFEDS)." Inquiries regarding this change should be forwarded to FSAFEDSBilling@healthequity.com or FSA@opm.gov. Benefits Officers can visit FSAFEDS toolbox for program resources, including marketing material, forms, and worksheets.
- DCPAS Employee Benefits Handout – Flexible Spending Accounts
- DCPAS FSA Fact Sheet
- DCPAS FSAFEDS Expanded Flexibilities Table with Benefits Administration Letter 21-802 attachment
- Benefits Administration Letter 20-801, Announcing New Third-Party Administrator and Billing Requirements for The Flexible Spending Account Program (FSAFEDS) Effective January 1, 2021
- Federal Flexible Spending Account Program (FSAFEDS) Website