OPM strengthens health savings accounts benefit

Federal employees now enrolled in high deductible health plans will be able to make pre-tax allotments to health savings accounts by the beginning of next year.

According to an April 6 benefits administration letter from the Office of Personnel Management, all eligible employees will be able to make the pre-tax deductions to their health savings accounts as early as April 27 and no later than Jan. 1, 2008, depending on their payroll provider.

High deductible health plans feature lower monthly premiums than traditional insurance plans, but in exchange have higher annual deductibles.

Health savings accounts are available to employees who are enrolled in a high deductible plan, not covered under someone else's plan, not enrolled in Medicare and not claimed as a dependent on someone else's tax return. Currently, employees with high deductible health plans make contributions to such accounts with after-tax earnings and then declare the contributions on their annual tax returns to receive the tax benefit.

But after the new agreement between OPM and payroll providers has been established, employees can establish pre-tax health savings allotments using the same method they would use to set aside money for other accounts. Defense Department employees, for example, use the MyPay service to manage pay and health benefit information, while many other agencies use the Employee Express service.

Unlike flexible spending plans, employees who elect deductions through health savings accounts are able to modify those deductions at any time as long as the change is in accordance with the administrative procedures established by the payroll provider.

The 2007 Internal Revenue Service limit on health savings account contributions is $2,850 for single coverage or $5,650 for family coverage. People who are 55 or older may make an additional contribution of $800 for the year. The maximum contribution includes the "premium pass-through" amounts that employees receive through their health plan.

Stay up-to-date with federal news alerts and analysis — Sign up for GovExec's email newsletters.
Close [ x ] More from GovExec

Thank you for subscribing to newsletters from GovExec.com.
We think these reports might interest you:

  • Going Agile:Revolutionizing Federal Digital Services Delivery

    Here’s one indication that times have changed: Harriet Tubman is going to be the next face of the twenty dollar bill. Another sign of change? The way in which the federal government arrived at that decision.

  • Cyber Risk Report: Cybercrime Trends from 2016

    In our first half 2016 cyber trends report, SurfWatch Labs threat intelligence analysts noted one key theme – the interconnected nature of cybercrime – and the second half of the year saw organizations continuing to struggle with that reality. The number of potential cyber threats, the pool of already compromised information, and the ease of finding increasingly sophisticated cybercriminal tools continued to snowball throughout the year.

  • Featured Content from RSA Conference: Dissed by NIST

    Learn more about the latest draft of the U.S. National Institute of Standards and Technology guidance document on authentication and lifecycle management.

  • GBC Issue Brief: The Future of 9-1-1

    A Look Into the Next Generation of Emergency Services

  • GBC Survey Report: Securing the Perimeters

    A candid survey on cybersecurity in state and local governments

  • The New IP: Moving Government Agencies Toward the Network of The Future

    Federal IT managers are looking to modernize legacy network infrastructures that are taxed by growing demands from mobile devices, video, vast amounts of data, and more. This issue brief discusses the federal government network landscape, as well as market, financial force drivers for network modernization.

  • eBook: State & Local Cybersecurity

    CenturyLink is committed to helping state and local governments meet their cybersecurity challenges. Towards that end, CenturyLink commissioned a study from the Government Business Council that looked at the perceptions, attitudes and experiences of state and local leaders around the cybersecurity issue. The results were surprising in a number of ways. Learn more about their findings and the ways in which state and local governments can combat cybersecurity threats with this eBook.


When you download a report, your information may be shared with the underwriters of that document.