DoD Urged To Establish Flexible Spending Accounts for Military

As you may remember, the 2009 Defense Authorization Bill instructed the Department of Defense (DoD) to establish Flexible Spending Accounts (FSAs) for military members.  FSAs allow users to set aside pre-tax dollars to pay for a variety of medical and child care expenses and can result in significant tax savings for users.

In a recent press conference, the Military Officers Association of America (MOAA) President Vice Adm. Norb Ryan (USN-Ret) stated, “Currently serving military people are the only major employee group excluded from using flexible spending accounts (FSA). This exclusion wrongly denies them access to important options to reduce their out-of-pocket expenses for health and dependent care.”  Vice Adm. Ryan was speaking in favor of new legislation that would force the DoD to implement FSAs for military members.

FSAs for federal workers were authorized in 2003, but the DoD has not yet developed a plan to offer such accounts.  Each year, Congress and military groups urge to the DoD to take action.  Congress even mentioned it in the 2010 Defense Authorization Bill, but still no action.  Due to the inaction of the DoD, lawmakers have proposed legislation that will force the DoD to develop procedures and make FSAs available within 6 months after the bill becomes law.

Kathy Moakler, director of government relations for the National Military Family Association, says that the military lifestyle does present some challenges for establishing FSAs.  She specifically cited PCS moves and deployments.  I can see how deployments might be a problem, but I am having a little trouble understanding how moving could impact FSAs.  I will readily admit that I am not thoroughly versed in all the nuances of FSAs, so perhaps there are aspects that I am missing.

The bipartisan legislation was introduced last Thursday.  I will be eagerly keeping an eye on the outcome of this legislation!

About the Author

Kate Horrell
Kate Horrell is a military financial coach, mom of four teens, and Navy spouse. She has a background in taxes and mortgage banking, and a trove of experience helping other military families with their money. Follow her on twitter @realKateHorrell.
  • Tara Gray Burkholder

    I think this would be a fantastic idea. Tricare United Concordia doesn’t cover a lot of things like neuromuscular dentistry (which has helped with my chronic migraines tremendously). I had to pay over $2000 out of pocket and my dentist wants to update my orthotic which is going to be more $$. It would also help with things like veneers, which is next on my list of “wants”.

  • Crystal

    I don’t see what the problem would be…. i agree wholeheartedly that it makes no sense. Your FSA account is linked to you not your address. I had an FSA with my old employer and we would select what was put in and get a debit card to use for qualifying non covered medical expenses. This does not seem like something difficult to implement, a simple transfer of funds pre tax to the fsa account … kinda like what they do already for our TSP

    oh sorry for the necro :)

  • Steve

    Does anyone know the current status of the FSA for the military?