Relationship Between FSAs, FLTCIP Explained

The Office of Personnel Management has issued guidance regarding the relationship between the federal flexible spending account program and the Federal Long Term Care Insurance program, explaining that FLTCIP premiums cannot be paid from FSA accounts. While in general money in a health care FSA can be used for expenses listed in IRS Publication 502 referring to medical and related deductions from taxes and that booklet lists long-term care premiums as one of those deductible items, an exception applies such that those premiums can’t be paid from pre-tax money from FSA accounts. As OPM put it: “The Internal Revenue Service code specifically excludes long term care insurance as a qualified benefit under a cafeteria plan, so long term care insurance premiums (including FLTCIP premiums) cannot be provided pre-tax, and are not reimbursable under an FSA.” This restriction applies as well to the “alternative insurance plan” and “service package” programs that are offered as alternatives under the FLTCIP.