Here's How Families Can Prepare for the New FSAFEDS Debit Card Coming in 2027

A new Visa debit card will give eligible service members another way to pay for health care expenses through the Federal Flexible Spending Account Program (FSAFEDS) in 2027.

The new payment option will become available January 1, 2027. According to the U.S. Office of Personnel Management (OPM), the card will be particularly useful for FSAFEDS participants covered by TRICARE, which doesn’t offer paperless reimbursement.

The change comes ahead of the Federal Benefits Open Season, which runs from November 9 through December 14, 2026.

How Will the New FSAFEDS Debit Card Work?

The FSAFEDS Visa debit card will allow participants to pay directly at checkout for eligible health care expenses using funds from their FSAs at participating health care providers, pharmacies, and other eligible merchants.

The OPM said the card would provide access to FSA funds at the point of service, “eliminating the need to wait for reimbursement.”

For military families using TRICARE, this means eligible purchases can be paid for without first covering the cost personally and submitting a separate reimbursement claim.

However, using the card doesn't eliminate all documentation requirements. Cardholders must retain itemized receipts and Explanation of Benefits (EOB) statements because FSAFEDS may request documentation to verify certain purchases. Participants should also keep their records for up to seven years in case of an IRS audit.

The card cannot be used for ATM withdrawals, cash back, or purchases at merchants that do not qualify as eligible health care transactions.

FSAFEDS Debit Card vs. Paperless Reimbursement in 2027

During Open Season, eligible FSAFEDS participants whose insurance carriers support paperless reimbursement can choose between that option and the new debit card.

However, TRICARE and some other insurance carriers don’t participate in paperless reimbursement. The OPM confirmed that eligible FSAFEDS participants covered by those carriers will receive the debit card.

"When TRICARE participants sign up for FSAFEDS, they don’t have the option to enroll in paperless reimbursement. They will receive a FSAFEDS Visa FSA Card," the OPM stated.

Here's how the two payment methods compare:

The OPM also clarified that participants aren’t required to use the card for every eligible purchase.

“If they choose not to use their card at the point-of-sale, they have the option of submitting the claim for reimbursement to FSAFEDS,” the agency explained.

For participants eligible to choose either payment method, their selection will remain in effect throughout the 2027 benefit period. The OPM said requiring the election during Open Season helps maintain consistent claims processing and reduces administrative confusion.

Who Can Enroll in a Military Health Care FSA?

The military Health Care Flexible Spending Account (HCFSA) allows eligible service members to set aside pretax earnings for qualifying health care expenses their insurance may not cover.

Eligible participants include:

• Regular active-component service members
• Reserve-component members performing qualifying Active Guard Reserve duty
• National Guard members performing qualifying Active Guard Reserve duty
• Certain Coast Guard Reserve members serving on active duty for more than 180 days

Participants can use HCFSA funds for eligible healthcare expenses incurred by themselves, their spouses, and qualifying dependents, including adult children through age 26. Covered expenses may include dental treatment, eyeglasses, contact lenses, copayments, and certain over-the-counter health care products.

An HCFSA is separate from TRICARE. Having TRICARE coverage doesn't automatically enroll someone in FSAFEDS, and the debit card doesn't expand which health care expenses qualify.

The card will also be available for Limited Expense Health Care FSAs, which generally cover eligible dental and vision expenses. It won’t be available for Dependent Care FSAs.

What Should Service Members Consider Before Enrolling?

For 2027, the published Health Care FSA contribution limit is $3,400. The OPM noted that the IRS typically updates the maximum election amount each year, so participants should check the confirmed 2027 limit when making their elections.

Eligible participants who re-enroll in a 2027 HCFSA or Limited Expense HCFSA may carry over up to $680 in unused funds from 2026, provided they elect at least $100 for 2027.

FSAFEDS participation doesn’t automatically renew. Service members must make a new election each year if they want to continue using their accounts.

Before choosing a contribution amount, service members should estimate their expected out-of-pocket expenses, including dental work, prescription costs, vision care, and other qualifying purchases.

Unused funds exceeding the applicable carryover limit may be forfeited.

Eligible service members can enroll or re-enroll through FSAFEDS.gov during Federal Benefits Open Season. They should also review the program’s card restrictions, documentation requirements, and reimbursement options before making their 2027 elections.