What Is a Health Care Flexible Savings Account (HCFSA)?
A Health Care Flexible Savings Account (HCFSA) is a pre-tax benefit that helps eligible military servicemembers and their families save money on out-of-pocket healthcare expenses. As healthcare costs continue to rise, an HCFSA can make budgeting for medical expenses more manageable by allowing you to set aside tax-free funds for qualified care not covered by TRICARE.
Who Is Eligible for a Military HCFSA?
To help with these expenses, eligible active component servicemembers and members of the Active Guard Reserve on Title 10 orders may enroll in a Health Care Flexible Savings Account (HCFSA). This pretax account allows you to set money aside from your paycheck to pay for healthcare expenses not covered by TRICARE. Eligible out-of-pocket expenses can include co-pays for prescriptions and healthcare visits, medical supplies, orthodontia, vision care (such as contact lenses and eyeglasses), and in vitro fertilization (IVF).
What Expenses Can an HCFSA Be Used For?
Eligible out-of-pocket expenses can include a wide range of healthcare costs, such as:
- Co-pays for prescriptions
- Co-pays for healthcare visits
- Medical supplies
- Orthodontia
- Vision care, including contact lenses and eyeglasses
- In vitro fertilization (IVF)
HCFSA benefits include tax savings, greater affordability for out-of-pocket healthcare, and convenience.
Money contributed to a Health Care Flexible Savings Account is not subject to:
- Federal income tax
- State income tax (in most states)
- Social Security and Medicare taxes
This can help lower your overall taxable income. Contributions are deducted automatically from your paycheck before taxes.
How Much Can You Contribute to an HCFSA?
Eligible participants may contribute between $100 and $3,200 per year per individual toward their HCFSA.
Key things to know about contributions:
- Contributions are spread throughout the year via payroll deduction
- The full elected amount is available at the beginning of the plan year
- Up to $640 in unused funds may carry over to the next year
- Re-enrollment during Open Season is required to keep carryover funds
How Does Military HCFSA Reimbursement Work?
Paperless reimbursement is not currently available for military HCFSA participants. Receipts and claims must be submitted manually through the FSAFEDS mobile app, online, or by mail or fax.
How Much Can You Save With a Military HCFSA?
Eligible servicemembers may enroll in an HCFSA during Open Season or during a qualifying special enrollment period.
By taking advantage of this account, you could potentially save an average of 30 percent on eligible unreimbursed healthcare expenses, depending on your individual tax situation. Actual savings will vary.
For personalized guidance, consider contacting a military tax professional.
Military Savings Support
For more information about Health Care Flexible Savings Accounts, and to calculate your potential savings, visit fsafeds.gov/explore/hcfsa or contact Armed Forces Mutual's Member Benefits at 800-522-5221 or memberbenefits@aafmaa.com.
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