Federal employees are being urged to enroll or reenroll in a health care flexible spending account (HCFSA) for the 2026 calendar year as health costs climb and Federal Employees Health Benefits (FEHB) premiums jump 10.2 percent from 2025, the Office of Personnel Management (OPM) said.
An HCFSA lets employees set aside pretax dollars to pay qualified out-of-pocket medical, dental and vision expenses—deductibles, coinsurance and copayments—that FEHB or other insurance does not cover.
Contributions reduce federal and state income tax liabilities as well as FICA and Medicare payroll taxes, producing overall tax savings commonly ranging from 20 to 50 percent.
For example, an employee earning $50,000 who contributes $2,000 could save about $600 in taxes while preserving $2,000 in health-care purchasing power.
Only permanent full-time or part-time federal employees who are eligible to enroll in FEHB may participate. Federal retirees are not permitted to join, and employees who leave or retire must spend all HCFSA funds by their departure date.
Qualified expenses may be incurred by the employee, a spouse, and eligible tax dependents, including adult children. For 2026, the HCFSA contribution range is $100 to $3,400—up $100 from the 2025 maximum.
Spouses who are also federal employees may each contribute up to $3,400, and spouses can use one another’s HCFSA funds for covered expenses when permitted by their employers’ plans.
Participation does not automatically continue from one year to the next. Employees enrolled in 2025 must reenroll for 2026 if they want continued coverage. The HCFSA reimburses expenses not covered by FEHB, the Federal Employee Dental and Vision Insurance Program (FEDVIP), TRICARE or any other health, dental or vision insurance.
Executive Branch employees and those at agencies that adopted the Federal Flexible Benefits Plan (FedFlex) may enroll through the FSAFEDS program.
Enrollment for the 2026 plan year runs from November 10 to December 8, 2025. Employees must choose an annual contribution amount when they enroll; the total is deducted pretax and paid into the HCFSA in equal amounts across 26 pay periods in 2026.
With FEHB premiums and out-of-pocket costs rising, financial advisers say an HCFSA remains one of the most tax-efficient tools for federal workers to manage increasing medical, dental and vision expenses.