Two Types of FSAs Planned

The OPM plan envisions two types of FSAs, with employees having the choice of participating in either, both or neither. One, directed to medical costs, will allow employees to set aside up to $3,000 per year to pay costs such as copayments and deductibles as well as costs that may not be covered by insurance such as dental and eye care. In the other, directed to dependent care, they will be able to designate up to $5,000 a year for childcare and/or elder care costs. They note that under the tax code, money put into such accounts is “use or lose”-that is, it cannot be rolled over from one tax year to another. That should not be a major concern regarding child and elder care accounts, in which the costs are regular and relatively predictable, officials say. However, usage of co-payments, deductibles and other medical expenses that would qualify for the medical FSA is much more irregular and unpredictable, meaning that participants will need to exercise care in deciding how much to designate and how to use that money.