In a quest to "improve" the nation's health care system, the Senate Finance Committee is proposing to limit to $2,500 the amount of money individuals can put into an FSA each year. Currently that limit for people in the Federal Employees Health Benefits Plan is $5,000.

FSA's now can range from $250 to $5,000. The accounts are funded with pre-tax dollars and deducted from your biweekly paycheck. If you set up an FSA for $4,000, for example, that means your taxable income reported to the IRS is $4,000 less than you actually make.

Money you set aside in an FSA can be used to purchase thousands of health care and medically-related items that aren't otherwise covered by your health plan. That can include everything from aspirin to sunscreen.

Benefits expert John Elliott says that failure to set up an FSA is one of the biggest mistakes federal and postal workers make. In July, we tipped you that revenue-hunters on Capitol Hill were targeting FSAs. Now it's happening as part of health care reform.

If FSAs are limited in the dollar amount or in what they can be used to buy (things like OTC drugs) the next step will be to further reduce, and eventually eliminate them.

Don't panic yet, but stay tuned...

Open Season Correction

In a recent column on Long Term Care insurance I said - incorrectly - that feds would be able to enroll in the new LTC program during the regular benefits open season mid-November through early December. Not so.

Here's the official Office of Personnel Management explanation:

There will be an open season ... but it will not include long term care insurance. An open season for long term care insurance would be open to all employees, and would provide for abbreviated underwriting - this is not happening this fall. What will be happening for LTC insurance this fall is a decision period for current enrollees of the program.

So the open season will be a review period for current LTC policy-holders only.

Many thanks to OPM for the clarification.

Meantime, for an update on the new LTC program, click here. For the age-based premium increases, and more information on the program, click here.

People

Donald A. McCall has been named Manager of the Year by the Federal Managers Association. He works at the Marine Corps air station at Cherry Point, N.C. He got the top honor at FMAs Zone 3 conference last week at Myrtle Beach, S.C.

Maria S. Lefevre, chief of state at the Government Printing Office is moving over to a senior executive job with the Department of Transportation. Her new title is Associate Administrator for Administration for Research and Innovation Technology Administration. Her first task: Squeezing that on her new business cards!

Nearly Useless Factoid
by Suzanne Kubota

Your choice of "sandwich lubricant" may be an indicator of your age. Miracle Whip brand manager Justin Parnell tells Slate.com research showed their "buyers were tending to skew older." That's why they're putting out a new ad campaign targeting the 18-34 year-old demographic.

To reach me: mcausey@federalnewsradio.com