Changes Coming to FSA's

By on November 5, 2012 in Human Resources, News

Flexible Spending Accounts (FSAs) are one of the more recent additions to federal benefits.  Yes, they’ve been around a decade or so, but that is relatively “new” in the world of federal benefits.  They allow us to set aside pre-tax money to pay unreimbursed health care and dependent care expenses.

There have been some changes in FSAs in the past (i.e., requiring a doctor’s prescription for over the counter drugs), and a major new change is coming in 2013.  As part of the implementation of the Affordable Care Act (or ObamaCare), the amount that can be set aside in a health care FSA will be reduced to $2,500 and will be increased each subsequent year by inflation.  There will be no change in the $5,000 that can be set aside in a dependent care FSA.

Another item regarding FSAs that bears mentioning is that any expenses incurred after an employee has left federal service (either by retiring or resigning) cannot be reimbursed, even if the employee had money in the account.  Those planning on leaving federal service should pay extra attention to their FSA so that they do not leave money on the table in the year in which they leave.

John Grobe’s latest book, The Answer Book on Your Federal Employee Benefits, has just been released by LRP Publications. The book is written in an easy to understand question and answer format and covers all areas of federal benefits from the perspective of an employee at various stages of their career. Order your copy at

© 2016 John Grobe. All rights reserved. This article may not be reproduced without express written consent from John Grobe.


About the Author

John Grobe is President of Federal Career Experts, a consulting firm that specializes in federal retirement and career transition issues. He is also affiliated with TSP Safety Net. John retired from federal service after 25 years of progressively more responsible human resources positions. He is the author of Understanding the Federal Retirement Systems and Career Transition: A Guide for Federal Employees, both published by the Federal Management Institute. Federal Career Experts provides pre-retirement seminars for a wide variety of federal agencies.

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  1. IAD says:

    Also note that it is $5,000 per family for dependant care, but $2,500 per Federal employee.  So, if both people are Feds, they can take advantage of up to $5,000 Health FSA combined.

  2. Guest says:

    FSAs offer employees a tax reduction. Surely it comes as no surprise that any program/provision that reduces tax revenue (as FSAs do) is at risk these days. I’m grateful for whatever break I can get, for as long as I can get it! And don’t forget that you can claim and receive the full amount of your annual FSA allotment long before you’ve put the funds into the account — and if you leave service before you’ve paid the full allotment, you don’t owe anything!

    Note to BlindPilot: You might want to look for a new doctor. It’s not illegal to write a prescription for medicines that are available OTC. Your doctor simply doesn’t WANT to.

  3. $21202845 says:

    Obama and his minions kept this FSA reduction Top Secret. Did any of you know about it? As Nancy (deer in the headlights) Pelosi said, “you have to pass it to know what’s in it.” They are a bunch of dirty, sneaky con artists who are determined to erode/eliminate Fed/Retired employee benefits in order to pay for Obamacare. Obama and his cronies excel at Dirty Tricks…there should have been enough pissed off Feds to vote against him; however, most of them must have voted for him. They need their heads examined because they’re only hurting themselves. Look at the FEHB premiums for 2013…why even bother getting it?  If you’re sick, just go to the emergency room and let the taxpayers suck it up. That’s what I plan to do. Drop FEHB and use the Emergency Room as my Primary Care. They cannot deny treatment to anyone. 

  4. remkmm says:

    It is $2500 per individual per each FSA. So, if your spouse has their own FSA, a family can deduct up to $5000.

  5. Shorttymer2013 says:

    Hope that Kool Aid tasted good going down. 

    Guess the good news is that allowable TSP contributions are up $500. 

  6. guestwo says:

    That  can’t be true.  My God Obama told me he wouldn’t raise taxes on me.  (i.e., requiring a doctor’s prescription for over the counter drugs), and a major new change is coming in 2013. As part of the implementation of the Affordable Care Act (or ObamaCare), the amount that can be set aside in a health care FSA will be reduced to $2,500 and will be increased each subsequent year by inflation. 

    • The Master says:

      a doctor’s prescription for over the counter drugs is in effect now and will be changed so there is no requirement begining in 2013.

      • BlindPilot says:

        So to get reimbursed for purchasing OTC, one must now pay a doctor for a doctor’s visit to write a presciption for something that does not require a prescription.  The cost of that doctor’s visit is usually greater than the cost of an OTC item.  And the delay waiting for the doctors prescription negates the purpose of OTC — immediate purchase and use to treat a medical condition.  i.e. If I have a headache, I have to wait for the doctors appointment (many days) to get a prescription to purchase an OTC which stores do not need the presciption for.  Hopefully, that headache is gone before I can purchase OTC asprin with that doctors presciption!

        How do you get a doctor to write a PRESCRIPTION for somethign that does not require a prescription?  My doctor has said he cannot do that, it is illegal.  The doctors has given me formal written recommendation for using an OTC, but that paperwork has been denied by FSA!

        FSA – you are failing us with impossible stupid paperwork requirements!

        John Grobe – maybe you can write an article on this failure and contradiction.

        • DeskSlave says:

           Jeez – sounds like you want to claim $2500, just for Midol…

          • guestwo says:

            I’m sure the people who need antacids, decongestants, who’s kids need syrups, lotions, bandages, find your post hilarious. 

        • IGiveUp005 says:

          My doctor charges me for the extra paper work such as the letter of medical necessity. So for a $10 bottle of OTC or suppliments, it now costs me my co-pay $20 plus a $5 fee!  That uses up my FSA faster and I’m getting less out of it!

’s not illeal to write a prescription for OTC it’s just more paperwork for the doctor to fill out.  They are on the clock too. Now I’m visiting my doctor for unnecessary medical appointment which stop other who really need the care. This is REALLY stupid!

      • guestwo says:

        What are you talking about? In 2013 you will still need a prescription!!!”1. How are the rules changing for reimbursing the cost of over-the-counter medicines and drugs from health flexible spending arrangements (health FSAs) and health reimbursement arrangements (HRAs)?
        A. Section 9003 of the Affordable Care Act established a new uniform standard for medical expenses. Effective Jan. 1, 2011, distributions from health FSAs and HRAs will be allowed to reimburse the cost of over-the-counter medicines or drugs only if they are purchased with a prescription. This new rule does not apply to reimbursements for the cost of insulin, which will continue to be permitted, even if purchased without a prescription.”