COMMANDER NICOLE SCHWEGMAN: Hey everyone, it's Commander Nicole Schwegman. Can someone let me know if they can hear me?
(UNKNOWN): Loud and clear.
CMDR. SCHWEGMAN: Thank you so much — thank you so much. Hey everyone, thanks so much for your time today. We're going to go ahead and get started.
I want to introduce to you Jennifer Walker. She's the Executive Director for Dependent Care Flexible Spending Account Initiative, and she's going to — if you can see, she has a presentation on the screen that is also the embargoed materials that you got.
She's also joined by Andy Cohen, who is Director of the Office of Financial Readiness, and they're going to explain this new rollout of the Dependent Care Flexible Spending Account for you.
After they've finished with their presentation, I'll call on the folks who asked to ask questions. And then just know after, when we hang up this call, the embargo breaks and you are free to post your, your stories or tweets or whatever.
So again, thank you so much, and then I'm now going to go ahead and just turn it over to Ms. Walker. Ma'am, over to you.
EXECUTIVE DIRECTOR JENNIFER WALKER: Thank you very much and thank you to everyone who is here to hear about this initiative. This was initially announced as part of Taking Care of Our People in the March 2023 memo, and what you're going to hear today is our information on the rollout for Dependent Care Flexible Spending Account for service members, which has been a collaborative effort between the Department of Defense and OPM.
As many of you may be aware, over the last several months, the department has been implementing DCFSAs. Starting with last fall, we launched an exploratory work group to investigate options for implementing these accounts specifically for service members. Prior to this, they were not available to service members and were only available to civilian DOD employees.
In March, we announced the memo Strengthening Our Support to Service Members and Their Families, part of the Taking Care of Our People initiative, and that memo announced that DOD would make Dependent Care Flexible Spending Accounts accessible to service members. At that time, we did not announce the timeline or any further details, and that's what we're here to announce today.
In June, there was an executive order from the White House stating that the Secretary of Defense shall, in coordination with the Director of OPM, establish flexible spending accounts for the care of military Dependents for military personnel by January 1st, 2024, and what we'll be sharing with you today is that we will meet that timeline to make this benefit available to our service members.
Today, we're launching this educational campaign, and then starting in mid-November through mid-December, which is the federal benefits open season, service members will be able to enroll in this benefit for accounts to start on January 1st, 2024.
Dependent Care Flexible Spending Accounts are accounts where service members or any enrolled individual can contribute up to $5,000 per year, pre-tax, for use for eligible dependent care services. On this slide, you see a short list of some of those services. There are many other services that are eligible for reimbursement under these accounts. The funds that are contributed, up to $5,000 per family or as little as $100, are not subject to any payroll taxes.
As I previously mentioned, service members will be able to enroll starting in mid-November through mid-December and the federal benefits open season. If they do not enroll at that time or if there's a new service member, they can enroll throughout the plan year or if they experience a qualifying life event. Several of them are listed here — births, deaths, divorces, adoptions, and changes in an individual's dependent care situation.
There is a much larger list of qualifying life events that is available at FSAFEDS. FSAFEDS is administered by the Office of Personnel Management, and that is the program that currently supports DOD civilians and will support DOD service members for enrollment in these accounts.
At this time, the DOD estimates that about 400,000 service members have eligible dependents and will be eligible for enrollment in these accounts. That includes families who have children who are under the age of 13 or who have a spouse or other tax dependent, regardless of age, who is mentally or physically incapable of self-care, and those are the IRS requirements for eligibility for a DCFSA.
The population who will be eligible to enroll this year includes DOD civilians who are already eligible, as well as the regular active components, and active Guard and Reserve members who are on Title 10 orders.
Listed here on the bottom of this slide is the populations who are not yet eligible for enrollment. That includes active Guard and Reserve members who are on Title 32 orders, other Reserve component members, and uniformed service members in the Coast Guard, NOAA, and the U.S. Public Health Service. The department is continuing to pursue the feasibility of extending this benefit to additional populations.
These accounts are a key part of the department's Taking Care of Our People initiative. By signing up for a DCFSA account, a service member can lower their taxable income by up to $5,000. This can result in more money in their pocket, more take home pay, and it's also a message to effectively budget for dependent care expenses.
The funds that are contributed to these accounts are placed into the DCFSA account, the FSAFEDS, and can only be used for dependent care services. This is a tool to help families find affordable childcare and is vital for maintaining overall military readiness.
Critical for the department's rollout of Dependent Care Flexible Spending Accounts is ensuring that service members understand these accounts and to make an educated decision on whether they should sign up and whether a DCFSA account is right for their family.
Today, the department is rolling out a comprehensive educational campaign, supported primarily by the DOD's Office of Financial Readiness. On the (inaudible) website, you will find a landing page with a plethora of materials to support service members and their families in learning more about this benefit. This page includes videos, posters, fact sheets, and a — a comprehensive list of frequently asked questions about these accounts.
Additionally, Military OneSource today launched an updated fact sheet related to these accounts, as well as an updated benefits page. And finally, FSAFEDS, which is administered by OPM, launched today a uniformed services landing page that is specific to DCFSA for uniformed service members and includes additional frequently asked questions and content that are relevant to the service member population.
And finally, in mid-November, the enrollment for service members will occur on the FSAFEDS site, starting in mid-November. And you can learn more at the links on this slide, and I thank you very much for your time today.
CMDR. SCHWEGMAN: All right. So, with that I'm going to go ahead and start the Q&A portion. Ellen from Synopsis, please unmute yourself and feel free to ask your question.
Q: Hi, thank you for doing this. I see that Reserve component members on Title 32 and not on orders are not eligible, and there are already complaints that the whole eligibility for benefits between the different kinds of orders is confusing and frustrating. How are you going to manage that as people come on and off of the various types of orders?
MS. WALKER: At this time, the department is only extending this benefit to AGR members who are on Title 10 orders. We are continuing to look at the feasibility to extend this benefit to additional populations. And it's also important to mention that OPM's FSAFEDS cafeteria plan for this benefit requires an enrollee to be on orders for 180 days or more.
We're continuing to work through the complexities of extending this benefit for those additional populations and understand that there are concerns from that population. We will share more information when it is available.
CMDR. SCHWEGMAN: And Ellen, do you have a follow-up?
Q: Yeah, I do. So, somebody goes on orders for 190 days, so they're not allowed to set up the plan until they've been on orders for 180 days?
MS. WALKER: No, they are able to set up the plan on the first day of their orders. In fact, if they are aware of their orders in advance, the FSA rule for any qualifying life event or for a new employee is you can set up that account 31 days prior and up to 60 days after the occurrence of that event. So, they do not need to wait until the end of that 180 days, but their order length does need to be for 180 days or longer.
Q: Okay. Thank you so much.
CMDR. SCHWEGMAN: Patricia?
Q: Yes, hi. Thanks for doing this. I understand most of my questions will probably be answered in those — those fact sheets and their references but, you know, once that account is set up, how do you access it and then pay? Like, you know, how do they verify that they're using the money for these specific things, like school and childcare and that kind of thing?
MS. WALKER: So absolutely. The funds are administered by FSAFEDS. They are working with the DOD's payroll providers, and funds will be automatically deducted from service member pay and sent over to FSAFEDS.
Once that occurs, the member can log in to their FSAFEDS account. There is a mobile app as well. And on that app, they can see the funds that are available in their account for them to use and they — that is where they submit their claims to receive these funds.
They can either have the funds paid out directly to their dependent care provider or they can pay in advance and then FSAFEDS will reimburse the member.
Q: Okay, so there is an option to have that just directly go to the daycare or the pay — the caregiver, that kind of thing?
MS. WALKER: Absolutely, yes there is.
CMDR. SCHWEGMAN: Do you have a follow-up, Patricia?
Q: No, I think — I think that's about it.
CMDR. SCHWEGMAN: Okay. Well, fantastic. Well, I mean, short but sweet. So, is there anything you'd like to add, Mr. Cohen?
DIRECTOR ANDREW COHEN: Yeah, just we — just want to also talk about really quick that we know the military life cycle is unique and that military families have some challenges that other families don't have. And so, one of the things that's unique about the DCFSA for military families is under qualifying life events, that should a family get the deployment or PCS orders, that counts as a qualifying life event under the (inaudible) plan for military families for DCFSA.
Q: Can I ask one more question?
CMDR. SCHWEGMAN: Sure.
Q: I'm just — I am just curious about, like, it — your sort of outreach to people in trying to explain to them the tax implications of it and why this is, you know, a money saver for them. I know that there is — I — you know, there are savvy people in the world but there's also people that this is just confusing to them. So — so how — you know, how are you selling this as a real advantage to lowering their tax base?
MR. COHEN: So that — that — that's a great question. And so one of the things we're doing as part of our kick off today is to begin educating the force with the resources that Jennifer talked about, and those resources also directs — or encourage members to reach out to, our DOD financial counselors, our network of counselors at the installation or at Military OneSource, and that the counselors can help walk them through the pros and cons to determine if a DCFSA is — is right for them and to help them make that informed financial decision. And they're available to help with any other financial questions that folks have about the — making sure that they're building financial well-being.
Q: Thank you. Appreciate it.
CMDR. SCHWEGMAN: Hey, just because we had a — a little bit of time, I just want to throw out if there's one — anyone else who has a burning question that did not get to ask it and did not sign up ahead of time? Now's your time to do it. We'll hold for — for a few seconds.
All right, hearing nothing. If you have any additional questions that come up after this call and in — you'd want to ask them, just use our distro that we provided earlier today to send those questions in, and we'll happily source those questions for you.
As of now, the embargo is broken. Thank you so much for attending this call and we'll be in touch. Take care.