The Department of Defense rolled out an exciting new benefit earlier this year that could save military families hundreds—or even thousands—of dollars each year. The healthcare flexible spending account (HCFSA) is now available to active duty service members, reservists, and National Guard members, marking a significant expansion of financial benefits for military families.
This new offering includes both a health care flexible spending account and a dependent care flexible spending account. The timing couldn't be better, as military families continue to face rising healthcare costs even with TRICARE coverage.
Important note: Retirees and Veterans are not eligible for this benefit. When you retire or separate from service, any remaining funds in your account will be paid out on your termination date.
If you or your spouse have experience with Health Savings Accounts (HSAs), you might think FSAs work the same way. While both accounts help you save on healthcare expenses, they operate quite differently. Let's break down what makes each unique and help you decide if a FSA is right for your family.
HSA vs FSA: Understanding the Key Differences
The Similarities
Both HSAs and FSAs offer valuable tax advantages:
- Contributions reduce your taxable income
- Withdrawals for qualified medical expenses are tax-free
- Both cover similar eligible expenses like copays, prescriptions, dental care, and vision services
- Money can be used for spouse and dependent medical expenses
The Critical Differences
Why Military Families Should Consider a FSA
You might wonder why you'd choose a healthcare flexible spending account over a health savings account given these differences.
Here's why a FSA makes sense for many military families:
Filling TRICARE's Gaps
While TRICARE provides excellent coverage, it doesn't cover everything. Your healthcare flexible spending account can bridge these gaps:
- Over-the-counter medications that don't require prescriptions
- Specialty treatments like massage therapy, acupuncture, or chiropractic care
- Vision and dental expenses for family members
- Emergency pharmacy runs when your child gets sick in the middle of the night
- Cost-shares and copays for family members receiving care
Perfect for a Military Lifestyle
The FSA structure actually works well for military families:
- Immediate access to your full annual contribution helps with unexpected medical expenses
- Predictable medical costs like glasses, dental work, or orthodontics can be planned for
- No high-deductible requirement means you can keep your current TRICARE plan
Smart Financial Planning
An FSA helps you budget for known healthcare expenses while reducing your tax burden. For a family in the 22% tax bracket, contributing the maximum $3,300 could save nearly $1,000 in taxes.
What Happens When You Disenroll
You can disenroll during the annual open season or after a qualifying life event (like a PCS move, marriage, or birth of a child).
Remember that unused funds up to $660 can roll over if you re-enroll for the following year, but funds beyond that amount are forfeited.
Getting Started
Enrollment Periods:
- Next opportunity: Annual open enrollment (mid-November through mid-December 2025)
- After qualifying life events (within 60 days)
Before You Enroll:
- Calculate your expected annual healthcare expenses
- Review what expenses are FSA-eligible
- Consider your family's medical needs and upcoming expenses
- Speak with a DOD personal financial professional
Where to Enroll:
Visit FSAFEDS.gov to complete your enrollment during open season and manage your account throughout the year.
Making the Right Choice for Your Family
The new healthcare flexible spending account represents a valuable addition to military benefits that can provide real financial relief for service members and their families. While HSAs might offer more flexibility and long-term growth potential, FSAs provide immediate access to funds and work seamlessly with TRICARE.
Before making your decision, carefully evaluate your family's healthcare needs, review eligible expenses, and consider consulting with a financial counselor.
Whether you're dealing with routine family medical expenses or planning for larger healthcare costs, this new benefit could help stretch your military paycheck further.
For more information about FSAs and other military benefits, visit Military OneSource or speak with your installation's financial counseling services.
Start planning now for the upcoming open enrollment period in November—don't miss this opportunity to start saving on your family's healthcare expenses in 2026.
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