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By law, annuitants (other than reemployed annuitants) cannot participate in any flexible spending account (FSA) programs, including FSAFEDS. FSAs are a way of setting aside pre-tax salary for reimbursement of eligible expenses. Annuitants receive annuities, which are not salary.
The balances in your Health Care FSA (HCFSA), LEX HCFSA and Dependent Care FSA (DCFSA) are treated differently if you separate or retire before the end of the calendar year.
Your HCFSA or LEX HCFSA will terminate as of the date of your separation or retirement. There are no extensions. Any eligible health care expenses incurred prior to the date of separation will still be reimbursed but those incurred after the separation date are not reimbursable, even if you accelerated your allotments.
Your DCFSA remaining balance can continue to be used to pay for eligible dependent care expenses until your account balance is depleted or the end of the calendar year, whichever comes first.
Please note, in order to take advantage of the grace period for your DCFSA, you must be actively employed and making allotments through December 31 of the Benefit Period.
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