The Office of Personnel Management followed the private sector this week by extending the "use it or lose it" deadline for Flexible Spending Accounts.
Last month, the Treasury Department made the same adjustment for workers in the private sector, prompting a federal workers' union to request the same benefit for the civil service. Flexible Spending Accounts allow workers to set aside untaxed income for certain expenses not covered by standard health insurance, including co-payments, deductibles, laser eye surgery and dental work. The accounts have been available to private sector workers for years, but federal employees were not allowed to use the benefit until 2003.
The previous, and much maligned, rules required federal workers to use all the funds in their FSA by the end of calendar year. The new rules are effective for the 2005 calendar year and allow employees to use the funds in their account for an additional two and a half months. The new regulations also give employees one extra month-until May 31, 2006-to submit reimbursement claims for 2005 expenses.
In May, OPM officials had indicated that there were no plans to mirror the private sector change. Agency officials did not explain the decision to adopt the new policy.
The National Treasury Employees Union applauded the move. When the Treasury Department made its private sector announcement, NTEU officials called on OPM to extend the benefit to the federal workforce.
"The changes made by OPM will reduce the amount of money set aside by federal workers that could otherwise have been lost at the end of the calendar year," said NTEU President Colleen M. Kelley. She said that this is "the kind of action the government needs to take in order to compete with the private sector as the employer of choice."
Under the FSA guidelines, participants are allowed to put aside up to $4,000 for these expenses and up to $5,000 in dependent care accounts for child care and elder care costs.
"Health care costs continue to top the list of increasing concerns to all Americans and federal employees," said acting OPM Director Dan Blair. "These enhancements encourage all employees to take full advantage of options available in the [FSA] program."