Military members will have another way to save on taxes in 2025 as defense officials work to offer flexible spending accounts for medical expenses.
Defense officials are currently coordinating with the Office of Personnel Management to open these accounts to eligible service members by January 1, 2025, said Susan Mitchell, a Department of Defense tax advisor and executive director of the Military Tax Council. It is said that it aims to provide.
Similar to the Department of Defense's new Dependent Care Flexible Spending Account, enrollment in the new account will take place during the open enrollment season from mid-November to mid-December of this year, and likely from November 11th to December 9th. Until.
According to the federal Flexible Spending Account program, known as FSAFEDS, participants can save an average of 30% on the cost of these accrued expenses. The amount saved depends on each individual's tax status.
The Federal Flexible Spending Account program also administers flexible spending accounts for military dependents and is sponsored by the Office of Personnel Management.
Mitchell said the eligibility rules will likely be similar to the Dependent Care Flexible Spending Account rules for service members in the Active Component and Active Guard Reserve members in Title 10 orders.
These health care flexible spending accounts, already available to many Department of Defense civilian and private sector employees, will allow military personnel to deposit pre-tax funds into the account. This money can be used to pay for medical expenses not covered by Tricare or other medical treatments. The maximum amount you can put aside each year depends on the Internal Revenue Service's annual contribution limits. For example, in 2024, the maximum amount will be $3,200. The minimum value is $100.
“Tricare provides health insurance to military members and their families, and flexible spending accounts can help reduce costs, including out-of-pocket medical expenses,” Mitchell said.
Pre-tax dollars are deducted from a military member's gross pay and deposited into their account.
Service members can submit medical receipts for reimbursement of out-of-pocket expenses such as prescriptions, medical visits, orthodontics, contact lenses, eyeglasses, prescription sunglasses, and in vitro fertilization. Many over-the-counter items and medications, such as sunscreen, bandages, hearing aid batteries, antacids, allergy medicines, cold medicines, aspirin and other pain relievers, are included in eligible expenses and require itemized receipts. Attached.
Advocates for families praise the provision of flexible spending accounts for medical expenses.
“One of our goals is to reduce out-of-pocket costs for service members and their families,” said Eileen Hack, senior deputy director of government affairs for the National Military Families Association.
However, she argued that people should be wary of situations where “people may point to the HCFSA as the reason for increased medical costs.”
Mitchell advises military members and families interested in participating in a flexible spending account to track their unreimbursed medical expenses and understand how much they spend in a typical year. Information and calculation tools are available at his FSAFEDS.com.
Details regarding specific Department of Defense programs are expected to be released in late 2024.
Karen has covered military families, quality of life, and consumer issues for Military Times for more than 30 years and co-authored the chapter on media coverage of military families in her book, Battle Plans to Support Military Families. Also an author. She previously worked for newspapers in Guam, Norfolk, Jacksonville, Florida, and Athens, Georgia.
