What if I said there’s a program that will allow federal employees like you to set aside money for your health- and dependent-care expenses and help you to save on your taxes? You’d jump at the chance to sign up, right?
That’s exactly what the Federal Flexible Spending Account Program (FSAFEDS) will do for you. Money deducted from an employee’s pay into an FSA is not subject to payroll taxes, putting more money in your pocket. The Office of Personnel Management (OPM) says many FSAFEDS participants will see about a 30 percent drop in the federal taxes they would otherwise pay on the amount they have set aside in their FSA.
Yet, not many federal employees are taking advantage of this valuable benefit. Here are the most recent stats:
- 8 percent of the workforce has a health-care FSA
- 1 percent of federal employees have signed up for dependent-care FSAs
It’s not too late. During the open season (Nov. 14-Dec. 12) you can get in on this benefit and start saving money in the new year. Curious about how much you may save? Do the math with these FSA savings calculators.
Here is some basic information. There are three types of FSAs available to federal employees:
- Health Care FSAs: A pre-tax benefit that allows you to set aside funds to cover eligible medical, dental, and vision care costs that aren’t covered by your health care plan or through other means.
- Limited Expense Health Care FSAs: This is for people who have qualified high-deductible health plans and Health Savings Accounts (HSA). A limited-expense FSA will help you save on eligible out-of-pocket dental and vision care expenses.
- Dependent Care FSAs: A pre-tax account you can use to pay for preschool, summer camp, before- or after- school programs, and child or adult daycare.
You can contribute as little as $100 annually up to $2,250 into both types of health-care accounts. You can also carry over up to $500 from one year to the next—a step the federal government is taking to increase participation.
For dependent-care accounts, the annual contribution maximum is $5,000 for married employees filing joint returns and $2,500 for single parents or married employees filing separately.
The National Treasury Employees Union fought hard to bring an FSA program into the federal community so that you and all federal employees can use it to save on your taxes and conveniently pay for medical and dependent-care expenses, as private-sector workers can.
NTEU is working with OPM to address some recent issues with an administrator change, but FSAFEDS is still a good way to save on taxes.
Explore this program, ask questions and sign up.
Tony Reardon is part of the GovLoop Featured Blogger program, where we feature blog posts by government voices from all across the country (and world!). To see more Featured Blogger posts, click here. The writer is National President of the National Treasury Employees Union, which represents 150,000 employees in 31 agencies.