OPM suspends flexible spending account enrollments

The Office of Personnel Management has temporarily stopped employees from enrolling in the new federal flexible spending account program, but most agencies will roll out the benefit on July 1 as expected, according to an OPM official.

Mike Orenstein, an OPM spokesman, said employees interested in signing up for the accounts should go to the FSA Web site or call benefit counselors and submit contact information so that they can be notified when enrollment for the program becomes available.

"There is no suspension of the program," Orenstein said, stressing it would debut as scheduled in July.

Enrollment, however, has been suspended while OPM officials review inquiries from agencies about pending legislation that could affect administrative fees associated with the accounts. An amendment sponsored by Rep. Chris Van Hollen, D-Md., and included in the fiscal 2004 Defense authorization bill (H.R. 1588) would require agencies to pay those fees, instead of account holders. The House is expected to begin debate on the bill Wednesday.

A statement on the FSA Web site says, "We expect this review to be completed in the near future, at which time we will begin to accept FSA enrollments."

FSAs allow employees to set aside up to $3,000 pre-tax dollars to pay for health care costs-such as insurance deductibles and co-payments, prescription drugs, dental and vision care-that are not covered by traditional health care plans. Another $5,000 in pre-tax dollars can be put away to pay for child care and dependent care costs. Employees pay for the services and are reimbursed from the accounts. Internal Revenue Service rules require forfeiture of money not claimed through reimbursement during the plan year. Legislation is pending in Congress that would allow employees to carry over money instead of losing it.

OPM announced the new benefit last fall, with plans to enroll employees during a May 19 to June 20 open season, and begin taking contributions through payroll deduction in July. After awarding a contract to SHPS Inc. to manage the program, the agency announced in April that employees participating in the health care FSA program would have to pay a $4 monthly fee to cover administrative costs and dependent care FSA enrollees would be assessed 1.5 percent of the amount deposited into the accounts to pay for such costs.

Jerry Oehm, director of business development for SHPS, said federal agencies are currently unable to offset those costs, as some private companies do. Federal employees' union officials balked at the fees.

Several agencies will not be able to begin payroll deduction until as late as January 2004, and at least one has raised concerns about not having enough guidance from OPM on how to implement the program.

"We'll cross that path down the road," Orenstein said. "We want to have a successful launch like we did with the long-term care program. Other issues will be addressed as they become known and as they are relevant to the program."