Active-duty service members will have a new benefit in 2025: health care flexible spending accounts.
Service members will have the option to open health care flexible spending accounts for the first time during a special enrollment period in March 2025.
In essence, a health care FSA is a savings account that can be used to pay for items not covered by health or dental insurance. Such accounts have been available for years to employees of many federal agencies and private companies.
Troops can contribute up to $3,200 a year in pretax earnings toward eligible out-of-pocket health care expenses, with a minimum contribution of $100 annually. The money will be automatically withdrawn from their paycheck over the course of the year and deposited into their flexible spending account. The Internal Revenue Service determines eligible expenses and contribution limits, the latter of which may vary by tax year.
Because FSA contributions aren’t subject to payroll taxes, participants can save an average of 30% on eligible health care expenses, according to the Federal Flexible Spending Account Program, or FSAFEDS, which will administer the program. FSAFEDS offers a calculator to help determine potential annual savings.
Service members can expect more detailed information closer to enrollment time in March. In the meantime, troops can prepare by gathering information about what they’ve spent out of pocket over the last year.
More than 300 IRS-approved health care expenses qualify, including copays and deductibles; out-of-pocket costs for braces; glasses and contact lenses; prescription drugs; over-the-counter medicines; and wellness treatments such as acupuncture, massage and chiropractic care.
A wide variety of other items are also eligible, such as hand sanitizer and menstrual care products.
The accounts will be available to active-duty members and certain Reserve Component members performing active Guard and Reserve duty.
FSAFEDS also administers DOD’s dependent care flexible spending account benefit, which became available to service members in 2024.
Service members must submit receipts or other documentation with their claim form.
Once the enrollment period begins, service members can enroll online at fsafeds.gov. Service members must use and claim their FSA funds by the end of the plan year on Dec. 31. They can carry over up to $640 of unused funds into the next year if they reenroll.
Otherwise, it’s use or lose: Service members will lose any funds that aren’t used during the plan year.
If both spouses are eligible for a health care FSA, each earner can maintain a separate account, and, combined, can contribute between $200 and $6,400 total per year.
The Defense Department offers free assistance to service members deciding whether to use this benefit, through appointments with a personal finance or tax counselor via DOD’s Office of Financial Readiness and Military OneSource.
Karen has covered military families, quality of life and consumer issues for Military Times for more than 30 years, and is co-author of a chapter on media coverage of military families in the book “A Battle Plan for Supporting Military Families.” She previously worked for newspapers in Guam, Norfolk, Jacksonville, Fla., and Athens, Ga.
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