For the first time, service members will have the option to open Health Care Flexible Spending Accounts (FSAs) during a special enrollment period starting in March 2025. This new benefit allows troops to set aside money from their paycheck to cover out-of-pocket medical expenses not covered by health or dental insurance.
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What is a Health Care Flexible Spending Account (FSA)?
A Health Care FSA is a savings account that can be used for eligible health care expenses. These accounts have long been available to employees of federal agencies and private companies, but now service members can take advantage of this benefit as well. Troops can contribute up to $3,200 annually in pretax earnings, helping them save on medical costs throughout the year.
How the Health Care FSA Works for Service Members
The funds in a Health Care FSA are automatically deducted from a service member’s paycheck and deposited into the FSA account. The contributions are made with pretax earnings, so troops can save an average of 30% on eligible health care expenses. The Internal Revenue Service (IRS) determines the eligible expenses and contribution limits, which may vary each tax year.
Eligible Health Care Expenses
Service members can use their Health Care FSA to cover over 300 IRS-approved expenses. Some examples include:
- Copays and deductibles
- Braces and orthodontic treatments
- Prescription drugs and over-the-counter medicines
- Glasses and contact lenses
- Wellness treatments such as acupuncture, massage therapy, and chiropractic care
- Menstrual care products and hand sanitizer
This wide range of eligible items allows service members to offset the cost of various health care needs.
Who is Eligible for a Health Care FSA?
The Health Care FSA is available to active-duty service members, reservists performing Active Guard and Reserve (AGR) duty, and National Guard members performing AGR duty. Additionally, the Defense Department’s FSAFEDS program also manages the Dependent Care FSA, which became available to service members in 2024.
How to Enroll in a Health Care FSA
The special enrollment period will begin in March 2025. During this time, service members can sign up online at fsafeds.gov. Once enrolled, the FSA funds must be used by the end of the plan year on December 31. If service members reenroll, they can carry over up to $640 of unused funds into the following year. However, any remaining balance that exceeds this amount will be forfeited.
How Much Can Service Members Contribute?
Service members can contribute between $100 and $3,200 annually to their Health Care FSA. If both spouses are eligible for an FSA, they can each open a separate account, and together contribute a combined total of up to $6,400 per year. This allows families to maximize their savings for health-related expenses.
Planning for Enrollment
To get ready for the March enrollment period, service members should gather information on the medical expenses they’ve paid out of pocket over the past year. FSAFEDS also provides a calculator to help estimate potential savings.
Additional Support Available
Service members seeking assistance with understanding the Health Care FSA benefit can take advantage of free financial counseling through the Department of Defense’s Office of Financial Readiness and Military OneSource. Counselors are available for appointments to help troops determine if this benefit is right for them.
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Conclusion
The new Health Care FSA benefit provides service members with an opportunity to save on eligible medical expenses and better manage health-related costs. With more than 300 approved expenses, the FSA offers a valuable resource for service members looking to make their health care dollars go further. Be sure to stay informed and take action when the enrollment period opens in March 2025!
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