Using a Flexible Spending Account with TRICARE
Update: The DoD has approved a flexible spending account option for military families seeking child care. That type of FSA is for childcare only and not for healthcare options under TRICARE. You can learn more about military childcare FSAs here.
Can I Use a Flexible Spending Account (FSA) with TRICARE?
Many military families want to know if they can contribute to a Flexible Spending Account or FSA while using TRICARE. Using an FSA is a way to offset the costs of certain healthcare expenses (see below) by making pre-tax contributions to an FSA fund.
This helps pay for healthcare needs that are not covered by health insurance. As we’ll discover below, FSAs can be helpful for spouses or dependents covered by TRICARE, but not for those currently serving on active duty–the servicemember is not allowed to use an FSA.
How Flexible Spending Accounts Work
If your employer offers you the option of an FSA, you enroll the way you would for health insurance–as a new hire, during open season, or because a qualifying life event such as a marriage, birth, or death has occurred.
When you enroll in an FSA, you make pre-tax contributions to the fund up to an annual cap. This money is deducted from your pay before taxes–that means that your net income is taxed only after you have paid into the FSA. The applicant decides how much to spend each year for FSA-approved costs such as dental or vision care.
The money you pay into an FSA must be spent by the end of the year. It’s a “use or lose” situation and while the policies of FSA may vary from employer to employer, don’t expect a substantial amount of the unused FSA money to carry over into the new year.
Questions Readers Ask: Is an FSA considered health insurance?
As mentioned above, FSA is NOT health insurance, but may be an option you can use in association with an employer’s insurance coverage.
It is good to know the rules for using your health insurance AND how to use your FSA in conjunction with it, especially if you are using one or the other for the first time. TRICARE rules listed on the official site remind us why this is important. “Follow the rules of your other health insurance for getting care and filing claims” in order to use ANY additional coverage, FSA, etc.
Otherwise? TRICARE.mil states clearly, “If your other plan denies a claim for failure to follow their rules, TRICARE may also deny your claim.” That rule likely was not written with FSAs in mind, but it’s an important one to remember in any case–you’ll need to know how to properly file claims with your insurer and know how you can or cannot use your FSA. Sometimes you may need to learn to do both of them at the same time.
Questions Readers Ask: I’m on active duty. Can I use an FSA with TRICARE?
No. According to TRICARE.mil, those on active duty must use TRICARE and cannot use an FSA for themselves. Spouses and dependents do have options, but not active-duty military members.
Question Readers Ask: Can military spouses use an FSA with TRICARE?
As a military spouse working for a civilian or federal employer, you may be allowed to use an FSA in addition to certain TRICARE coverage. You are typically not restricted from doing so, but you may be required to coordinate with TRICARE when using “other medical coverage” such as an employer’s non-TRICARE options.
Read more: Comprehensive TRICARE Benefits Guide
Questions Readers Ask: Can I pay for my TRICARE or other health insurance premiums using my FSA?
No. You cannot use an FSA to pay your health insurance premiums. Typically you may not use an FSA to pay for any type of insurance premium or the expenses of “Continuation of Coverage”.
Questions Readers Ask: Are FSAs and HSAs the same?
A Flexible Spending Account and a Health Savings Account (HSA) are not the same. Typically, in order to use an HSA you must be enrolled in a high-deductible health plan, but TRICARE does not offer this.
There are several types of FSAs. One is a Medical FSA, and another is known as a Dependent Care FSA. (DCFSA).
- Medical FSA: This allows you to pay care providers including orthodontists, psychiatrists and chiropractors if these expenses aren’t covered by another plan. A medical FSA may also help you pay for drugs, prosthetics, hearing aids, and other devices.
- Dependent Care: This allows you to pay for expenses such as child care (including care for children “physically or mentally incapable of self-care”). Elder care is also paid for in certain circumstances.
Other types of FSA include reimbursement plans for commuting to a workplace, and those designed to help people adopt children. There are also “limited-purpose” FSA that may be associated with some healthcare plans.
>>Not sure where to start with your military benefits?
FSA Maximum Contribution Limits
FSAs have a maximum contribution limit subject to change each year. In 2022 that limit was $2,850. In 2023, the limit increased to over $3,000. The Dependent Care FSA limit for 2023 was 5,000, unchanged from the previous year.
These are the limits as published by the Internal Revenue Service. To learn more about these limits and how contributing to an FSA affects your taxes in the current year, consult a tax professional or an IRS representative.
About the author
Editor-in-Chief Joe Wallace is a 13-year veteran of the United States Air Force and a former reporter/editor for Air Force Television News and the Pentagon Channel. His freelance work includes contract work for Motorola, VALoans.com, and Credit Karma. He is co-founder of Dim Art House in Springfield, Illinois, and spends his non-writing time as an abstract painter, independent publisher, and occasional filmmaker.