More Flexible?

A new, longer window for private sector workers to spend money in Flexible Spending Accounts has not yet been extended to the federal workforce.

The Treasury Department extended the "use it or lose it" deadline for Flexible Spending Accounts in the private sector last week and a federal workers union is calling on federal officials to do the same for the public service.

Flexible Spending Accounts allow workers to put aside untaxed income for some expenses not covered by standard health insurance, such as co-payments, deductibles, laser eye surgery and dental work. The benefit has long been available to the private sector, but was not offered to federal workers until 2003.

Under current rules, federal employees must use all the funds in their account by the end of calendar year, or the money reverts to the government. Federal government workers 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.

The May 18 Treasury announcement, however, allows private employers to grant their workers an additional two-and-a-half months to spend the money in the account.

"The new rule will give workers with FSAs more time to pay for medical and dependent care expenses and will ease the year-end spending rush prompted by the prior rule," Treasury Secretary John Snow said. "Putting people back in charge of their own care is one of the most important things we can do to strengthen our health care system."

The Office of Personnel Management declined to say whether the option will be offered to federal workers.

National Treasury Employees Union President Colleen M. Kelley sent a letter to OPM on May 20, calling for the benefit to be extended to the federal workforce. She described the Treasury announcement as a "modest and common-sense rule change."

"Given the [Treasury] secretary's and the administration's support for this new rule … NTEU would respectfully request that the federal government immediately and fully apply this to its own employees," Kelley wrote.

Last year, Sen. Charles Grassley, R-Iowa, called on the Treasury Department to allow workers with FSAs to roll over money year to year. Grassley applauded last week's announcement.

"The so-called 'use it or lose it' rule has discouraged millions of Americans from using flexible spending accounts. It's caused millions more to waste or forfeit precious health care dollars," Grassley said. "Workers shouldn't have to lose money just because they've been lucky enough not to have a health crisis. An artificial deadline doesn't make sense."