
Tricare and Flexible Spending Accounts can seem overwhelming, but understanding the basics can make a big difference in your financial planning.
Tricare is a health insurance program for military members, veterans, and their families. It's designed to provide comprehensive coverage for medical, dental, and pharmacy expenses.
If you're eligible for Tricare, you can also take advantage of Flexible Spending Accounts (FSAs) to set aside pre-tax dollars for out-of-pocket expenses. This can be a huge money-saver, especially for families with young children or frequent medical needs.
By combining Tricare and an FSA, you can potentially reduce your taxable income and lower your healthcare costs.
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Eligibility and Use of FSA
If you're a military dependent using TRICARE, you might be wondering if you can also use a Flexible Spending Account (FSA). The answer is yes, but with some limitations.
You can use an FSA for childcare, which can be a huge help for families. This is exactly what one military dependent was hoping for when they asked if they could use an FSA while on TRICARE.
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TRICARE is a health insurance program for military families, and using an FSA can help pay for healthcare needs that aren't covered by health insurance. This can be especially helpful for spouses or dependents covered by TRICARE.
However, if you're currently serving on active duty, you're not allowed to use an FSA. This is a rule that applies specifically to servicemembers.
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FSA Contribution Limits and Rules
You can use FSAs with TRICARE, which is great news for military dependents.
The maximum contribution limit for FSAs changes each year, and for 2022, it's $2,850. You'll need to spend all the money you've saved by the end of the year or you'll lose it.
Employers can opt-in to carry over up to $570 into the next year, so be sure to check with HR if your company does this.
The limit for a DCFSA is usually $5,000, but for 2021, it was increased to $10,500, and for 2022, it's back to $5,000.
Tricare and FSA

If you're a military dependent using TRICARE, you're likely wondering how it affects your job benefits. You can use FSA with TRICARE, but it's essential to understand the specifics.
TRICARE is a healthcare program for military families, and it's common for military dependents to use it. Using FSA with TRICARE can be beneficial, but it's crucial to know the rules.
As a military dependent, you're likely familiar with TRICARE's benefits, but you might not know how it interacts with your job benefits. FSA can be used in conjunction with TRICARE, but it's not always straightforward.
TRICARE is a comprehensive healthcare program that covers a wide range of medical expenses. FSA can be used to cover out-of-pocket expenses not covered by TRICARE.
How FSAs Work
You enroll in an FSA by choosing it as a new hire, during open season, or due to a qualifying life event like marriage, birth, or death.
To contribute to an FSA, you make pre-tax payments up to an annual cap, which is deducted from your pay before taxes.
The money you pay into an FSA must be spent by the end of the year, or it's considered "use or lose" – some employers may have different policies, but don't count on carrying over unused funds.
You can't use an FSA to pay health insurance premiums or expenses related to "Continuation of Coverage."
Using a Flexible Spending Account (FSA)
Using a Flexible Spending Account (FSA) can be a great way to offset healthcare costs for your family.
You're likely using TRICARE if you're a military dependent, and you might wonder how it affects your job benefits.
TRICARE is a health insurance program for military families, and it's common for people to use it in conjunction with a Flexible Spending Account (FSA).
You can contribute to a Flexible Spending Account (FSA) while using TRICARE, which helps pay for healthcare needs not covered by your insurance.
This can be especially helpful for spouses or dependents covered by TRICARE, but keep in mind that active-duty servicemembers are not allowed to use an FSA.
Using an FSA can save you money on taxes by making pre-tax contributions to an FSA fund, which is a definite perk.
How Flexible Spending Accounts Function
You enroll in an FSA by choosing to participate during your initial hiring process, open season, or due to a qualifying life event such as a marriage, birth, or death.
To enroll, you make pre-tax contributions to the fund up to an annual cap, which is deducted from your pay before taxes.
The money you pay into an FSA is deducted from your pay before taxes, so your net income is taxed only after you've paid into the FSA.
You decide how much to spend each year for FSA-approved costs such as dental or vision care.
The money you pay into an FSA must be spent by the end of the year, it's a "use or lose" situation.
Unused FSA money typically does not carry over into the new year, although the policies of FSA may vary from employer to employer.
You can't use an FSA to pay your health insurance premiums or the expenses of "Continuation of Coverage".
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Tax-Saving Health Care for Troops
Service members will have another way to save money on their taxes in 2025, as defense officials are working to offer health care flexible spending accounts.
Defense officials are currently coordinating with the Office of Personnel Management and aim to offer these accounts to eligible service members by Jan. 1, 2025.
Eligibility rules for these health care flexible spending accounts will likely be similar to the rules for the dependent care flexible spending accounts for service members.
Service members in the active component and Active Guard Reserve members on Title 10 orders will be eligible to participate.
These health care flexible spending accounts will allow service members to set aside pretax dollars in an account to help pay for health care expenses that are not covered by Tricare.
The maximum amount that can be set aside each year will depend on the Internal Revenue Service annual contribution limits, with a maximum of $3,200 in 2024.
For another approach, see: Flex Spending Account Rules Termination Employment
Service members can then submit health care receipts to be reimbursed for things like co-pays for prescriptions and health care visits, orthodontia, contact lenses, glasses, and more.
Many over-the-counter items and medicines, such as sunscreen, bandages, and hearing aid batteries, will also be eligible expenses with itemized receipts.
By using a health care flexible spending account, service members can save an average of 30% of the cost of these unreimbursed expenses.
FSAs vs HSAs: What's the Difference?
FSAs and HSAs may seem similar, but they're not the same. Typically, you need a high-deductible health plan to use an HSA, but TRICARE doesn't offer this.
A key difference is that an HSA requires a high-deductible health plan, which TRICARE doesn't offer. This means TRICARE participants can't use an HSA.
There are several types of FSAs, including Medical FSAs and Dependent Care FSAs. Medical FSAs cover expenses like care from orthodontists, psychiatrists, and chiropractors, as well as drugs, prosthetics, and hearing aids.
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Dependent Care FSAs, also known as DCFSA, cover expenses like child care and elder care in certain circumstances.
Here are some examples of FSA types and their uses:
- Medical FSA: Covers medical expenses like care from orthodontists, psychiatrists, and chiropractors, as well as drugs, prosthetics, and hearing aids.
- Dependent Care FSA (DCFSA): Covers expenses like child care and elder care in certain circumstances.
Other types of FSAs include reimbursement plans for commuting to work and those designed to help people adopt children. Limited-purpose FSAs may also be associated with some healthcare plans.
Frequently Asked Questions
Does TRICARE Prime have HSA or FSA?
No, TRICARE Prime is not eligible for Health Savings Accounts (HSA) or Flexible Spending Accounts (FSA). This is because TRICARE Prime premiums are not eligible for reimbursement through these accounts.
Can the military use FSA?
Yes, the military offers flexible spending accounts (FSAs) to uniformed service members to help save on healthcare and dependent care expenses. This allows them to pay eligible expenses with pre-tax earnings, reducing their financial burden.
Sources
- https://careerrecon.com/using-fsa-tricare/
- https://livelyme.com/whats-eligible/tricare-fees
- https://mymilitarybenefits.com/benefits/using-flexible-spending-account-tricare/
- https://www.militarytimes.com/pay-benefits/mil-money/2024/02/29/military-to-offer-tax-saving-health-care-accounts-for-troops/
- https://childcare.gov/consumer-education/military-child-care-financial-assistance
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