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May Human Resources Advisor Volume 2, Issue 5

Flexible Spending Accounts

The Federal Flexible Spending Accounts (FSA) program, also known as FSAFEDS was introduced by the Office of Personnel Management (OPM) in 2003 to allow Federal employees to voluntarily set aside money on a pre-tax basis from your paycheck to pay for a wide range of health care and dependent care expenses that are not covered under the Federal Employees Health Benefits Program (FEHBP). Since the FSA is funded by your pre-tax dollars, your taxable income is reduced. As a result, the amount of taxes you pay is also reduced. Flexible spending accounts reimburse employees for expenses. The accounts do not pay for services up-front. Employees submit receipts to the plan administrator, and they are reimbursed from their flexible spending account, as they incur eligible expenses.

The Federal Flexible Spending Accounts are being administered by SHPS, one of the nation's largest FSA administrators. The Federal FSA program offers two types of plans:

  • The Health Care Flexible Spending Account (HCFSA) is for health care expenses not paid by the Federal Employee Health Benefit (FEHB) Program.
  • The Dependent Care Flexible Spending Account (DCFSA) pays for dependent care costs for a child or parent. Employees can elect either plan or both.

Eligibility

All Federal civilian employees eligible for FEHB coverage are also eligible for the HCFSA benefit (even if not currently enrolled). Employees with eligible dependents can also enroll in the DCFSA (excluding temporary employees with no fixed work schedules whose tour of duty is six months or less). Annuitants are not eligible for this program.

Employees electing this benefit can set aside up to $5,000 per Plan Year under the HCFSA and up to $5000 for the DCFSA. The agency servicing payroll office will deduct these contributions from the employees' pay throughout the plan year and remit them to the FSA administrator, SHPS Inc., for deposit into the employees' FSA accounts. There is also an administrative fee of $4.00 per month for an HCFSA. For DCFSAs, the charge is 1.5 percent of the elected balance, however, the Department of Defense is currently paying the administrative fees associated with your FSA so there is no charge to you.

New, rehired, or newly eligible employees have 60 days from their entry on duty or eligibility date or until 1 October to enroll in the FSA program for the current Plan Year. Employees wishing to enroll after 1 October must do so during the Open Season.

The FSA Plan Year is 1 January through 31 December each year. Open seasons occur each year at the same time as the annual FEHB Open Season with allocations beginning the first pay period of January the following year. Unlike Premium Conversion, participation in a FSA is not automatic or continuous; employees must make an election each and every year. However, once you submit your election, those benefit elections are irrevocable once the plan year begins, unless you experience a qualifying "change in status" event.

How to Apply

SHPS Customer service representatives are available from 9 AM until 9 PM (EST), Monday through Friday, to answer questions and provide enrollment assistance by calling toll free 1-877-FSAFEDS (372-3337). Employees can also make an election via the Web at http://www.fsafeds.com. Elections must include your payroll office identifier which can be found on the website and on your leave and earnings statement.

SHPS offers a number of resources that will help you to learn more about the Federal FSA program such as an allotment and tax-savings calculator. To find out more about the Federal Flexible Spending Accounts program, visit the FSAFEDS website at www.FSAFEDS.com or call the toll-free number 1-877-FSAFEDS (1-877-372-3337), 9:00 am to 9:00 pm eastern time, Monday through Friday. For the hearing-impaired the TTY/TDY number is 1-800-952-0450. Questions may also be sent to SHPS via e-mail at .