Changes coming in 2013 to flexible spending accounts

Friday - 11/30/2012, 3:13pm EST

Ed Zurndorfer, registered employee benefit consultant

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As federal employees weigh health plan options during Open Season, registered employee benefits consultant Ed Zurndorfer advises feds not to overlook flexible spending accounts.

"What employees have to keep in mind is as they're choosing their health care plan for 2013, there is no health insurance plan out there that's going to pay for everything. Employees invariably are going to be paying something out of pocket for something," Zurndorfer said in an interview with The Federal Drive with Tom Temin and Emily Kopp.

Flexible spending accounts are the best way to pay for these out-of-pocket costs, he said. Federal employees can open two types of flexible spending accounts: One for dependent care to use for child care and adult day care, and one for health care spending. These accounts are pre-tax dollars taken out of feds' salaries.

New account limits

The Affordable Care Act lowered the limit for health care flexible spending accounts to $2,500 starting Jan. 1, 2013. The previous limit was $5,000.

The limit for dependent care accounts remains $5,000.

No over-the-counter meds

Previously, feds could use their flexible spending accounts to pay for over-the- counter medications. Starting Jan. 1, 2013, they can only use their accounts for prescription drugs.

Use it or lose it

For flexible spending accounts in 2013, feds do not have to use all their funds by Dec. 31, 2013. The deadline to use 2013 funds is March 13, 2014.

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