Pay & Benefits Watch Pay & Benefits WatchPay & Benefits Watch
Key developments in the world of federal employee benefits: health, pay, and much more.

Losing ‘Use It or Lose It’


If you’re among the millions of Americans with an employer-administered, tax-free health care spending account, you must use the funds you contribute to it within a defined period or risk losing them. If you’re not a fan of ‘use it or lose it,’ then you have until Friday to tell the Treasury Department you’d like to see that long-standing rule scrapped.

Flexible Spending Accounts deduct pretax dollars from an employee’s paycheck to pay for out-of-pocket health care expenses, such as co-pays, contact lenses or dental work not otherwise covered through health insurance. Federal employees can obtain FSAs through the Federal Flexible Spending Account Program (FSAFEDS), which is governed by the same Internal Revenue Service regulations as private sector FSAs.

Federal employees can opt in to an FSA during open season in November and December. All FSA participants have 14.5 months to use money they deposit into the account; unused funds are forfeited and go to the employer.

Treasury is asking for comment on whether to scrap this plan, according to a notice sent out this spring.

That document also lays out new FSA rules under the Affordable Care Act. For instance, the legislation prohibits using FSA funds for over-the-counter drugs unless a doctor has prescribed them and caps the total contributions to the accounts at $2,500 -- half the current limit for FSAFEDS participants, who can put as much as $5,000 in their accounts. The new rules will go into effect in 2013.

If the use-it-or-lose-it rule is scrapped FSA beneficiaries may be able to roll over funds from one year to the next or, perhaps, the grace period for spending leftover funds would extend further into the next calendar year.

The “use it or lose it” rule is currently a “big inhibiting factor” for employees considering opting in to an FSA, said Walton Francis, primary author of the Consumers’ Checkbook Guide to Health Plans for Federal Employees.

STEM Volunteers

If you work in a science, technology, engineering or math-related field, the Office of Personnel Management wants you to take advantage of your agency’s existing workplace flexibility policies to help attract more employees to STEM fields.

In a recent memo, OPM director John Berry tells chief human capital officers to consider current flexibility practices such as granting employees annual leave, leave without pay, credit hours under flexible work schedules and compensatory time off to enable employees to perform STEM-related volunteer service.

Each agency should review its own alternative work schedule policies and practices for granting leave time, OPM says.

“The president has called on the more than 200,000 federal scientists and engineers to identify and pursue STEM-related volunteer activities in their communities, with an emphasis on broadly inclusive activities that draw from all segments of society, including women and girls,” Berry said in the memo. “Through direct involvement in their local communities, federal employees help build a STEM talent pipeline for future recruitment into federal service.”

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