Active-duty military members will get a new benefit in 2025: flexible spending accounts for health care.
The military will have the possibility of opening flexible spending accounts for healthcare for the first time during a special registration period in March 2025.
Essentially, a healthcare FSA is a savings account that can be used to pay for items not covered by health or dental insurance. Such accounts have been available for years to employees of many federal agencies and private companies.
Troops can contribute up to $3,200 per year in pre-tax income to cover qualified healthcare expenses, with a minimum contribution of $100 per year. The money will be automatically withdrawn from their salary during the year and deposited into their flexible spending account. The Internal Revenue Service determines qualifying expenses and contribution limits, the latter of which may vary by tax year.
Because FSA contributions are not subject to payroll taxes, participants can save an average of 30% on qualified healthcare expenses, depending on the Federal Flexible Spending Account Programor FSAFEDS, which will administer the program. FSAFEDS offers a calculator to help you determine potential annual savings.
Servicemembers can expect more detailed information closer to the March registration period. In the meantime, troops can prepare by gathering information on what they’ve spent out of pocket over the past year.
More than 300 IRS-approved healthcare expenses qualify, including copays and deductibles; reimbursable costs for orthodontic appliances; glasses and contact lenses; prescription drugs; over-the-counter medications; and wellness treatments such as acupuncture, massage and chiropractic care.
A wide variety of other items are also eligible, such as hand sanitizer and menstrual care products.
The accounts will be accessible to active duty members and certain reserve component members performing active Guard and Reserve duties.
FSAFEDS also administers DOD Dependents Flexible Spending Account Benefitwhich became available to the military in 2024.
Military members must submit receipts or other documentation with their claim form.
Once the registration period begins, military members can register online at fsafeds.gov. Members of the military must use and claim their FSA funds before the end of the plan year on December 31. They can carry over up to $640 of unused funds to the next year if they re-enroll.
Otherwise, it’s use it or lose it: the military will lose any funds that are not used during the plan year.
If both spouses are eligible for a health care FSA, each employee can maintain a separate account and, combined, can contribute between $200 and $6,400 total per year.
The Department of Defense offers free assistance to service members deciding whether or not to use this benefit, through appointments with a personal finance or tax advisor through the DOD Office of Financial Readiness and Military OneSource.
Karen has covered military families, quality of life and consumer issues for Military Times for more than 30 years, and co-authored a chapter on media coverage of military families in the book “A Battle Plan for Supporting Military Families.” She previously worked for newspapers in Guam, Norfolk, Jacksonville, Florida, and Athens, Georgia.