Available for all military personnel is a new benefit allowing servicemembers and their families to save money on medical expenses. Each year, the cost of living and medical expenses rises, making efforts to maintain a daily budget a challenge. It can be especially difficult when you consider the cost of out-of-pocket healthcare.  

To help with your out-of-pocket health-related expenses, there is a new benefit starting March 2025 to active component servicemembers and members of the Active Guard Reserve on Title 10 orders: a Health Care Flexible Savings Account (HCFSA). This pretax account allows you to set money aside from your paycheck to put aside for healthcare expenses not covered by TRICARE. Such out-of-pocket expenses can include co-pays for prescriptions and healthcare visits, medical supplies, orthodontia, vision care (contact lenses, eyeglasses) as well as in vitro fertilization (IVF).  

HCFSA benefits include tax savings, greater affordability for out-of-pocket healthcare, and convenience. Money that is contributed to the Health Care Flexible Savings Account is not subject to federal income tax, state income tax (in most states), or Social Security and Medicare taxes, which helps to lower your taxable income. Contributions may be automatically deducted from your paycheck and will be before taxes. 

Eligible participants may contribute $100 up to $3,200 per year per individual toward their HCFSA. Even though you contribute to the FSA throughout the year, the full amount you choose to contribute is available at the beginning of the plan year. $640 in HCFSA funds can carry over to the next year, but you must re-enroll during Open Season. 

Paperless reimbursement is not available for military members with your HCFSA. You’ll have to submit receipts and claim expenses manually, through the FSAFEDS app, online, or by mail/fax. 

Eligible servicemembers can begin contributing to the HCFSAs starting March 2025 during a special enrollment period March 3-31, 2025. By taking advantage of this account, you could potentially save 30 percent (on average) of the cost of these unreimbursed expenses; however, savings will depend on your individual tax situation. Tax savings for individuals depend on your financial situation. Contact your military tax professional for more information. 

Military Savings Support 

For more information about Health Care Flexible Savings Accounts, and to calculate your potential savings, visit fsafeds.gov/explore/hcfsa or contact AAFMAA Member Benefits at 800-522-5221 or [email protected].