Home Media Center News Releases

Washington, D.C.—The National Treasury Employees Union (NTEU) today applauded quick action by Rep. Chris Van Hollen (D-MD) and the House Government Reform Committee to permit the administrative fees associated with the new Flexible Spending Account (FSA) program to be paid in ways that don’t require participating federal employees to pay for this new benefit.

A week ago NTEU sharply criticized the Office of Personnel Management (OPM) for actions that would have lead to the payment by employees of substantial fees for taking part in the program. It was this criticism that sparked congressional action.

“The language approved by the Government Reform Committee is a step forward in bringing the FSA program in line with the private sector programs it is designed to emulate,” said NTEU President Colleen M. Kelley. “Throughout the private sector, employees are not charged for participating in this program; the committee’s language seeks to ensure that federal employees won’t be charged either.” She urged Congress to adopt it.

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

Under a contract OPM negotiated with a private company to administer the federal FSA program, participating employees would have been charged $4 per month for taking part in a health care FSA, plus an additional 1.5 percent of the amount an employee sets aside in a dependent care FSA.

The dependent care account can be used to set aside as much as $5,000 to cover child-care expenses for working parents. Deductions of up to $3,000 will be allowed for the health care account.

After NTEU brought the fees to light, Democratic Reps. Henry Waxman (CA), Danny Davis (IL) and Chris Van Hollen (MD) wrote to OPM Director Kay Coles James to oppose charging federal employees the proposed fees.

Under the amendment advanced by Van Hollen, federal agencies would be given the authority to use other funds available to them to fund the costs of operating the FSA program.

In addition to highlighting the potential costs to federal employees of the way OPM planned to implement the program, NTEU is also concerned that OPM has not planned a sufficient educational program to help employees understand the benefits and risks of the FSA program. It begins with an open season on May 19.

NTEU the largest independent federal union, representing some 150,000 employees in 29 agencies and departments.