A Flexible Spending Account (FSA) is an employee benefit that allows you to set aside money, on a pre-tax basis, for certain health care and dependent care expenses. There are three types of FSA accounts: 1) Health Care FSA (HCFSA); 2) Limited Expense Health Care FSA (LEX HCFSA); and 3) Dependent Care FSA (DCFSA). If you make an FSA election for the 2021 plan year during the current Federal Benefits Open Season (November 9 – December 14, 2020), your election amount will be divided into allotments based on the number of pay dates in the plan year. Every pay date, an allotment is deposited directly into your FSA account.
A Health Savings Account (HSA) is an investment account available only to members who are enrolled in a High Deductible Health Plan (HDHP) under the Federal Employees Health Benefits (FEHB) Program. Your HDHP credits a portion of your premium to the HSA. You also have the option to make pre-tax contributions to the account. The funds in your HSA can be used to pay for your plan deductible and/or qualified medical expenses that do not count towards your deductible. These accounts earn interest and roll over any remaining balance from year to year. The funds are yours to keep whether you change plans, leave Federal service, or retire. Withdrawals can also be used for non-medical expenses. However, it will be subject to income tax, and if you are under age 65, an additional 10% tax penalty.
You cannot have both a HCFSA and an HSA. For additional information, view the comparison chart on the OPM website.