Washington, DC -- United States Office of Personnel Management (OPM) Director Linda M. Springer today announced a new option under the FSAFEDS Program, a limited expense health care flexible spending account (LEX HCFSA) for Federal employees enrolled in high deductible health plans (HDHP) with health savings accounts (HSA).

"We're pleased to offer this added benefit to federal employees who have taken advantage of HSAs offered in the Federal Employees Health Benefits program, to stretch their money even further," said Springer. "Federal employees work hard for their money and they sacrifice, so it is imperative they be given every opportunity to realize tax savings for themselves and their families."

Under the rules established by the Internal Revenue Service (IRS), general health care FSAs are not available to HSA participants. However, the IRS permits individuals to hold an HSA and a limited health care flexible spending account under certain circumstances, such as eligible dental and vision expenses.

"By establishing a LEX HCFSA, federal employees can save money on taxes by using FSA dollars for dental and vision care while preserving their HSA funds for other purposes, including simply saving those funds for the future," Director Springer added. "This empowers federal employees in HSA plans by giving them more control over their finances and health care expenditures."

Beginning with the 2006 Benefit Period, OPM will offer a LEX HCFSA for those enrolled in HDHPs with a funded HSA. FEHB carriers will be responsible for notifying HSA enrollees that they are eligible to enroll in a LEX HCFSA. Enrollees will have 30 days after being notified by their FEHB plan to establish their LEX HCFSA by calling a special FSAFEDS phone number. This means they will not enroll during the regular FSA open season held concurrently with the FEHB open season in November/December. The effective date of their enrollment will not be January 1, 2006, but rather will be prospective, depending on when they call to enroll. But, they will still be able to fully fund their LEX HCFSA up to the $5,000 maximum.

For more information on LEX HCFSAs, FSAs, and FEHB, please contact the Office of Personnel Management's Office of Communications and Public Liaison at 202-606-2402.