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Washington, D.C.—Extending flexible spending accounts (FSAs) to federal workers to help pay out-of-pocket medical expenses and for dependent care is both sound and wise public policy, particularly as a recruitment and retention tool, the leader of the nation’s largest independent union of federal workers told the administration’s chief personnel officer today.

In a meeting with Director Kay Coles James of the Office of Personnel Management (OPM), President Colleen M. Kelley of the National Treasury Employees Union (NTEU) urged that the administration move ahead with this program for federal workers. “With the human capital crisis the federal government faces,” Kelley told Director James, “it makes no sense to delay implementation any longer than necessary.”

President Kelley said she was “encouraged” by the stated support and backing of Director James for extension of FSAs to federal employees. OPM has been studying the issue.

Under FSAs, which are commonplace in the private sector, 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.

In her meeting with the OPM director, President Kelley stressed the importance of family-friendly benefits, along with higher pay, in making government service more competitive with the private sector.

The NTEU leader noted that since October 2000, federal workers have been permitted to pay their Federal Employees Health Benefits Program (FEHBP) premiums with pretax dollars under a program known as Premium Conversion, which was spread throughout government largely as a result of an effort by NTEU.

Kelley called the use of premium conversion by federal employees “a tremendous help,” particularly in light of rising health care costs. Premium conversion plans, she said, “are usually the first step an employer takes” in making FSAs available to their employees.

“With FEHB premiums and health care costs in general expected to continue to escalate,” the union leader said, “flexible spending accounts offer a small avenue of some relief.”

As the largest independent federal union, NTEU represents some 150,000 employees in 25 agencies and departments.