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Washington, D.C.—The head of the nation’s largest independent union of federal employees today expressed her shock and disappointment at actions of the Office of Personnel Management (OPM) that could wind up costing federal workers as much as $100 million in fees to take part in a new flexible spending account (FSA) program for out-of-pocket health and dependent care expenses.

In a letter to OPM Director Kay Coles James, President Colleen M. Kelley of the National Treasury Employees Union (NTEU) also said the agency is shirking its responsibility by failing to undertake the necessary educational campaign to ensure the success of the program.

Since 1998, NTEU has led the fight to make FSAs available to federal employees and thus to provide a benefit to federal workers that has been available for many years to private and state and local government employees. The program begins with an open season on May 19.

Under FSAs, employees are permitted to deduct specific amounts from their pretax earnings to be used for out-of-pocket health and dependent care expenses. As qualifying expenses are incurred, the employer reimburses the employee from his or her own money.

President Kelley took sharp issue with an OPM-negotiated contract with the private company that will administer the government’s FSA program and which will permit the firm to charge each participating employee $4 per month for taking part in the program—plus an additional 1.5 percent of the amount an employee elects to place in a dependent care FSA.

These fees, the NTEU president said, not only will come directly from the pockets of federal employees, but will be on top of the interest the firm will earn on the money it holds in FSA accounts.

In all, some 1.7 million federal workers are eligible to participate. The overall earnings potential for the firm is more than $100 million.

“If this is the kind of ‘negotiation’ that characterizes OPM’s annual secret negotiations with health carriers for the Federal Employees Health Benefits Program (FEHBP),” President Kelley wrote, “it is easy to see why OPM has come under such criticism for its role in that annual event.”

She directed OPM’s attention to an FSA program for its employees operated by the Postal Service, noting that no employee fees are charged for participating in the programs. “The federal government should not be charging its employees either,” she said.

The NTEU leader took OPM to task for FSA literature it has produced in which it states that there won’t be an educational or enrollment campaign for the initial FSA open season.

NTEU has worked with OPM through two administrations on FSAs, Kelley said, noting that one of the reasons given by OPM for the long lead time on instituting the program was the need to properly and thoroughly educate the federal workforce about the benefits and risks of electing an FSA.

“The literature does not indicate whether or not OPM ever plans to provide any education to employees concerning this new program,” she wrote.

As the largest independent federal union, NTEU represents more than 150,000 employees in 29 agencies and departments.