{"id":8470,"date":"2024-11-24T07:59:53","date_gmt":"2024-11-24T07:59:53","guid":{"rendered":"https:\/\/finderica.com\/federal-employees-should-consider-a-health-care-fsa-for-2025\/"},"modified":"2024-11-24T07:59:53","modified_gmt":"2024-11-24T07:59:53","slug":"federal-employees-should-consider-a-health-care-fsa-for-2025","status":"publish","type":"post","link":"https:\/\/finderica.com\/?p=8470","title":{"rendered":"Federal Employees Should Consider a Health Care FSA for 2025"},"content":{"rendered":"
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During the annual federal benefits open season, federal employees have an opportunity to change or enroll in a Federal Employee Health Benefits (FEHB) program health insurance plan and to change or enroll in a Federal Employees Dental and Vision Insurance Program (FEDVIP) dental\/and or vision insurance plan.<\/p>\n

The current open season also means that employees have the opportunity to enroll, or to reenroll, in a health care flexible spending account (HCFSA) offered through the Federal Flexible Benefits Plan (FedFlex) program. Information about the FedFlex program and participation in the Federal Flexible Spending Account program FSAFEDS<\/a> can be obtained at https:\/\/www.fsafeds.com<\/a>.<\/p>\n

There is another HCFSA offered through the FedFlex program called a \u201climited expense\u201d HCFSA or LEXHCFSA. The LEXHCFSA reimburses only qualified out-of-pocket dental and vision expenses. An employee who is ineligible to contribute to the HCFSA (for example, an employee who contributes to a Health Savings Account or HSA could own and contribute to a LEXHCFSA).<\/p>\n

Why Federal Employees Should Enroll in an HCFSA<\/h2>\n

Health care costs are increasing at a rate that exceeds inflation. 2025 FEHB program health plan premiums are increasing 13.5 percent from what they were during 2024. Dental and vision insurance premiums are also increasing during 2025 from what they were during 2024. In addition, out-of-pocket expenses including deductibles, copayments and coinsurance are increasing significantly. Employees have to pay these increasing out-of-pocket expenses for themselves and their families. Employees are aware that there are certain medical, dental and vision expenses that their insurance plans do not cover.<\/p>\n

An HCFSA allows employees (federal retirees are not permitted to participate in an HCFSA) to be reimbursed for medical, dental and vision expenses. An HCFSA is funded through a voluntary salary reduction agreement with an employer.<\/p>\n

All employee contributions to an HCFSA are deducted from an employee\u2019s gross salary before all taxes are deducted including: (1) Federal and state income taxes; and (2) the Social Security (FICA) tax; (3) the Hospital Insurance Tax (Medicare Part A) payroll taxes. As will be discussed below, another benefit of enrolling in an HCFSA is that the HCFSA owner can use the HCFSA to pay, or be reimbursed, for qualified expenses incurred by the HCFSA owner and dependent family members, even if the HCFSA has not yet been full funded.<\/p>\n

Qualifying for the \u201cFedFlex\u201d Program HCFSA<\/h2>\n

A federal employee can be enrolled in any health, dental or vision insurance plan in order to participate in an HCFSA offered through the \u201cFedFlex\u201d program. The employee can be enrolled in FEHB program, the FEDVIP, in TriCare, or be enrolled in a spouse\u2019s private employer sponsored health insurance plan. In order to enroll in an HCFSA, the employee must be eligible to enroll in the FEHB program, whether or not the employee is enrolled.<\/p>\n

Enrolling in the HCFSA and Making Contributions for 2025<\/h2>\n

Employees who want to participate in the FedFlex program and contribute to an HCFSA must enroll during the current open season. Those employees who are currently enrolled in an HCFSA during 2024 must reenroll for 2025.<\/p>\n

HCFSA enrollment for the 2025 plan (calendar) year (January 1,2025 to December 31, 2025) is done by visiting the website https:\/\/www.fsafeds.com<\/a> or calling 877-FSAFEDS (877-372-3337) or the TTY line 866-353-8058). Benefit counselors are available Monday through Friday from 9 am to 9 pm Eastern time.<\/p>\n

When enrolling in a HCFSA, an employee must decide how much of their gross salary they want to have deducted and contributed to their HCFSA. The minimum contribution is $100, and the maximum contribution is $3,300, an increase of $100 from the 2024 maximum contribution of $3,200. There are no federal agency contributions to an employee\u2019s HCFSA. The federal government pays all administrative expenses associated with the FedFlex program.<\/p>\n

Funding an HCFSA<\/h2>\n

Once an employee elects how much they want to contribute to their HCFSA during calendar year 2025, the employee\u2019s payroll office will deduct an equal amount from the employee\u2019s gross salary spread evenly over 26 pay dates during 2025. The following example illustrates:<\/p>\n

Example 1.<\/strong> Julia is a federal employee. During the current FSAFEDS open season, Julia elects to contribute the maximum $3,300 to her HCFSA during 2025. Starting with Julia\u2019s first pay date in January 2025<\/p>\n

$3,300\/26 (pay dates), or $126.92<\/em><\/p>\n

will be deducted from Julia\u2019s gross salary and contributed to her HCFSA.<\/p>\n

Note that assuming that Julia is in the 22 percent federal marginal tax bracket and 8 percent state income tax bracket during 2025, her 2025 federal income tax liability will be reduced by $3,300 times 0.22, or $726 and her 2025 state income tax liability will be reduced by $3,300 times .08, or $264.<\/p>\n

Until 2015, IRS rules prohibited the carryover of unused HCFSA funds from one plan (calendar) year to the next plan (calendar) year. However, since 2015 the IRS has allowed a carryover of unused HSFSA contributions from one plan (calendar) year to the next plan (calendar) year. The carryover amount from 2015 to 2016 was $500. The $500 limit has been indexed to inflation through the years. The carryover amount from the 2023 plan (calendar) year to the 2024 plan (calendar) year was $610. The carryover amount from the 2024 plan (calendar) year to the 2025 plan (calendar) year is $640.<\/p>\n

Distributions from an HCFSA<\/h2>\n

Distributions from an HCFSA must be made only to pay or (to reimburse the HCFSA owner) for qualified medical expenses incurred by the owner and dependent family members. These expenses must have been incurred during the period in which the HCFSA was in effect. The HCFSA owner is to receive the maximum amount of reimbursement, up to the elected total contribution for the plan (calendar) year. The following example illustrates:<\/p>\n

Example 2.<\/strong> Steven is a federal employee. During 2024, Steven elected to contribute $3,200 to his HCFSA. In April 2024, Steven\u2019s daughter started her orthodontic treatment. The total cost for the treatment was $6,000. Steven\u2019s orthodontist agreed to receive the $6,000 on a three-year installment basis with Steven paying $2,000 per yar, starting in 2024. In May 2024, Steven requests a $2,000 withdrawal from his HCFSA, even though year-to-date he had only contributed $1,353 to his HCFSA. Steven intends to reenroll in his HCFSA for 2025 during the current FSAFEDs \u201copen season\u201d and elects to contribute the maximum $3,300 during plan (calendar) year 2025. In early January 2025, Steven intends to request that $2,000 be withdrawn from his HCFSA in order to make the second $2,000 installment payment to the orthodontist. He can do this even though he would not have contributed less than $2,000 in early January 2025. Steven intends to reenroll in the FedFlex program during the 2026 \u201copen season\u201d and contribute the maximum possible to his HCFSA during plan (calendar) year 2026, making the third and final $2,000 installment payment to the orthodontist.<\/p>\n

Note that the HCFSA owner must send the FedFlex program \u201cthird party administrator\u201d (TPA) a written statement from an independent third party stating that medical, dental, or vision expenses have been incurred by the HCFSA owner or eligible family member and the amount of the expense. The TPA cannot make advance payments from the HCFSA for future or projected expenses.<\/p>\n

Expenses Eligible for Reimbursement from an HCFSA<\/h2>\n

Many of the HHCFSA owner and eligible family member\u2019s out-of-pocket expenses may be reimbursed from the HCFSA if those expenses are not covered by the owner\u2019s health, dental or vision insurance. TO check to see which expenses are potentially reimbursable, employees should go online to: https:\/\/www.fsafeds.com\/explore\/hcfsa\/expenses<\/a>.<\/p>\n

Typical expenses include:<\/p>\n

\u2022 Chiropractic services.
\u2022 Deductibles, coinsurance and copayments.
\u2022 Dental care including crowns, endodontic services, implants, oral surgery and periodontal services.
\u2022 Infertility treatments, and
\u2022 Over the counter (OTC) (drugs and medicine) .<\/p>\n

Note that any type of insurance premiums \u2013 health, dental and vision insurance, or life or long-term care insurance \u2013 are not eligible for reimbursement from the HCFSA.<\/p>\n

Important HCFSA Dates and Deadlines<\/h2>\n

The following table summarizes important HCFSA dates for 2025:\"\"<\/p>\n

<\/span><\/div>\n

Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

During the annual federal benefits open season, federal employees have an opportunity to change or enroll in a Federal Employee Health Benefits (FEHB) program health insurance plan and to change or enroll in a Federal Employees Dental and Vision Insurance Program (FEDVIP) dental\/and or vision insurance plan. The current open season also means that employees<\/p>\n","protected":false},"author":2,"featured_media":8471,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"rank_math_lock_modified_date":false,"footnotes":""},"categories":[348],"tags":[1122,2524,478,2963,326],"class_list":{"0":"post-8470","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-retirement","8":"tag-care","9":"tag-employees","10":"tag-federal","11":"tag-fsa","12":"tag-health"},"_links":{"self":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts\/8470","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=8470"}],"version-history":[{"count":0,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts\/8470\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/media\/8471"}],"wp:attachment":[{"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=8470"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=8470"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=8470"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}