Federal employees who discover at year's end that they have put too much money into their pre-tax flexible spending accounts will have an extra couple of months in 2006 to spend the money before being forced to forfeit any unspent funds, the Office of Personnel Management has announced.
The extension, announced by OPM's acting director, Dan G. Blair, means that federal employees will have until March 15, 2006, to spend down this year's accounts. Blair also said that employees would get an extra month, until May 31, 2006, to submit reimbursement claims for 2005 expenses.
OPM's announcement, made last week, follows a May 18 decision by the Treasury Department and Internal Revenue Service that gave private-sector employers permission to amend their FSA programs. Employees who overestimate how much to set aside in the pre-tax accounts have faced a "use it or lose it" deadline at the end of the year that often prompts last-minute spending sprees on discretionary medical needs.
Under the federal employee program, workers may set aside money for expenses not covered by their health insurance, including co-payments, dental work and over-the-counter medications, and to reduce the costs of dependent care, such as child care and elder care.
Blair said OPM will increase the annual health care FSA contribution limit from $4,000 to $5,000, beginning in 2006. Employees also may contribute up to $5,000 annually for child care or elder care.
"Health care costs continue to top the list of increasing concerns to all Americans and federal employees," Blair said in a statement. "These enhancements encourage all employees to take full advantage of options available in the [FSA] program."
After the Treasury Department announced the new grace period for private-sector employees, Colleen M. Kelley, president of the National Treasury Employees Union, called on OPM to provide a similar extension.
Although many private-sector employees have been able to use an FSA tax break for years, the program is relatively new to the federal sector. Kelley and former OPM director Kay Coles James worked together in 2003 to bring the job perk to the government.
Last year, OPM projected that, by 2007, more than 283,000 federal employees will be signing up for health car accounts and 43,627 will be setting up dependent care accounts.
Senate Confirms OPM Chief
The Senate has confirmed Linda M. Springer as director of OPM. She will take the reins from Blair, who has run the agency since the resignation of James in January.
Springer previously served as controller at the Office of Management and Budget and had planned to return to the private sector. But Bush administration officials lobbied her to stay in Washington and help lead a planned overhaul of the civil service.
The Senate also confirmed Linda M. Combs as controller at OMB, were she will head the office of federal financial management. Combs previously served as assistant secretary of transportation and as the chief financial officer at the Environmental Protection Agency.
Springer and Combs were confirmed by the Senate under unanimous consent procedures Friday.
The White House last week also announced the president's intent to nominate Colleen Duffy Kiko to be general counsel at the Federal Labor Relations Authority. If confirmed, she would succeed Peter Eide, who held a recess appointment that expired in January.
Kiko currently serves as a member of the Employees' Compensation Appeals Board at the Labor Department. A graduate of the George Mason University School of Law, Kiko has served as associate counsel for the House Judiciary subcommittee on civil and constitutional rights.
The White House also announced plans to name Mary M. Rose as a member of the Merit Systems Protection Board, for a term expiring March 1, 2011. Rose is vice chairman of the Federal Salary Council and chairman of the Federal Prevailing Rate Advisory Committee. A graduate of the Bon Secours School of Nursing, she previously served as deputy associate director in the White House Office of Presidential Personnel.