Active-duty service members will have a new benefit in 2025: health care flexible spending accounts. The DoD will make health care flexible spending accounts (FSAs) available to servicemembers for the first time in March 2025 through a special enrollment period, allowing participating military families to set aside up to $3,200 in pretax earnings to pay for qualified medical expenses.
The Military Officer’s Association of America (MOAA) affirmed that MOAA and the Military Coalition (TMC), an umbrella group which represents about 5.5 million members of the uniformed services community, have long promoted authorization of these FSAs, which are similar to employment benefits in the private sector. MOAA co-chairs TMC and several of its committees, including the Personnel Committee which championed the health care FSA.
MOAA applauds DoD for taking this step to help military families save on medical expenses, but we will remain vigilant on potential TRICARE out-of-pocket cost increases. Employers in the civilian sector sometimes shift health care costs to employees knowing FSAs can help mitigate the financial impact.
MOAA has long advocated for the world-class health care benefit servicemembers have earned – comprehensive coverage, robust access, and low out-of-pocket costs. We recognize health care FSAs will provide savings on TRICARE deductibles and cost sharing (for families on TRICARE Select) as well as non-covered or partially covered expenses such as contact lenses, glasses, and dental care. We will continue to oppose any proposals for disproportionate TRICARE fee increases even though the new health care FSA will provide an option to pay those fees with pretax dollars.
Health care FSAs are an optional benefit. They can help military families save money because the funds placed in an FSA have no employment or federal taxes deducted and are excluded from gross income when calculating income tax.
Health care FSAs can also help with budgeting – by contributing to an FSA, military families can set aside funds for anticipated medical costs which may make managing expenses more predictable.
Only currently serving members will be eligible for the DoD health care FSA – it will not be available to military retirees. This is consistent with eligibility for FSAFEDS, the FSA program for federal employees. FSAs are considered a salary benefit and are generally not available to retirees, per IRS rules, although many working-age military retirees have access to an FSA through post-military employment.
The health care FSA benefit is part of Secretary of Defense Lloyd Austin’s Taking Care of Our People initiative and one of seven recently announced DoD actions to improve the quality of life for servicemembers and their families.
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.
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.
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