OPM Extends Deadline for Federal Employees To Use FSA Funds

The Office of Personnel Management last week announced that federal employees will have additional time to use unspent funds in their flexible spending accounts before they must forfeit the funds, the Washington Post reports (Barr, Washington Post, 6/28). FSAs allow employees to allocate a specified amount of their salaries for health care costs not covered by their health insurance. The amount is subtracted from taxable income. However, employees at the end of the year must return to their employers any unspent funds (Kaiser Daily Health Policy Report, 1/5). According to OPM acting Director Dan Blair, federal employees will have until March 15, 2006, to use funds in their FSAs and until March 31, 2006 -- one additional month -- to submit reimbursement claims for 2005 expenditures. Blair also said that OPM in 2006 will increase the annual health care contribution limit for FSAs from $4,000 to $5,000 and that federal employees can contribute as much as $5,000 annually for child care or elder care. "Health care costs continue to top the list of increasing concerns to all Americans and federal employees," Blair said in a statement, adding, "These enhancements encourage all employees to take full advantage of options available in the (FSA) program." The announcement by OPM follows a similar move by the Treasury Department, which last month announced a new rule that allows private employers to amend their FSA programs (Barr, Washington Post, 6/28).