The Defense Department offers service members the option to set aside pretax earnings to help pay for health care costs. The health care flexible spending account is available to:
Service members enroll and elect to have a portion of their paycheck set aside in a benefit account on FSAFEDS.gov. Each month, pay is deducted from your paycheck prior to taxes being taken out and placed in your HCFSA.
The funds can be used to pay for eligible health care costs that aren’t covered by your health care plan. This includes copays, over-the-counter medications and products, vision and dental care, braces, glasses, contact lenses, chiropractic care and more.
Service members may contribute from $100 to $3,200 per year (Households where both earners are eligible for an HCFSA through their employer can maintain two separate accounts and contribute between $200 to $6,400 total per year.)
An HCFSA can help service members in a number of ways:
When you enroll in a health care flexible spending account, you elect to have a portion of your earnings deducted before taxes are taken out. This means the money you contribute is not subject to federal income tax, state income tax (in most states) or Social Security and Medicare taxes. This also lowers your taxable income. For example, if your annual salary is $50,000 and you contribute $3,000 to an HCFSA, you will only be taxed on $47,000. This can lower the amount of income tax you owe.
Health care flexible spending account contributions are deducted automatically from a service member’s paycheck before taxes, making it a convenient way to set aside funds for health care expenses that aren’t covered by your health care plan. You can plan and budget for these expenses by contributing a specific amount to the HCFSA each pay period.
In future years, participants will enroll online at FSAFEDS.gov during the Open Season enrollment period, mid-November through mid-December. You can enroll outside of Open Season if you have a qualifying life event, such as PCS or the birth/adoption of a child.
You will have access to your full election amount as soon as the plan year begins, Jan. 1. Your payroll deductions will continue until you have funded your HCFSA with your full election. If you enroll through a qualifying life event, your full election will be available in the first pay period following your enrollment.
You can carry over up to $640 from one plan year to the next if you reenroll. You have until April 30 of the following plan year to submit claims for eligible expenses incurred during Jan. 1 and Dec. 31 of the plan year.
Connect with a DOD personal financial professional or MilTax consultant to discuss the HCFSA benefit and how it might affect your financial and tax situation.
Visit FSAFEDS for more information or to enroll in an HCFSA.
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