FSAFEDS to restart payments after 10-day suspension on reimbursements

FSAFEDS is lifting a temporary suspension on reimbursement payments. But employees are expressing frustration with the lack of communication ahead of the pause.

For more than a week, federal employees enrolled in FSAFEDS have not been receiving payments for approved reimbursement claims made in their Flexible Spending Accounts.

The program suspended all reimbursement payments beginning June 16 as an effort to further strengthen anti-fraud and security measures, Federal News Network confirmed with a government source who explained the issue on the condition of anonymity.

“At this time, the FSAFEDS is holding all claims payments out of an abundance of caution,” FSAFEDS wrote Tuesday in a post on X. “FSAFEDS has taken this action due to recently discovered fraudulent claims activity. We are working to resolve and restore all claims payment activities as soon as possible.”

The pause on reimbursement payments, however, has been lifted and payments to employees should resume soon, Federal News Network has learned. FSAFEDS plans to process all reimbursements currently on hold by the end of the week.

“We apologize for any inconvenience you may have experienced during this period,” an FSAFEDS official wrote to a federal employee in an email Wednesday, obtained by Federal News Network. “FSAFEDS reimbursements have resumed as of today. All reimbursements currently on hold will be processed by close of business Friday, June 28.”

The payment suspension comes after a recent surge in fraudulent activity in the FSAFEDS program, which has been affecting hundreds of employee accounts. It also comes a few weeks after the Office of Personnel Management, which administers the program, suspended all new FSAFEDS enrollments.

OPM said it has been working with third-party vendor HealthEquity, which manages the FSAFEDS program, to strengthen security measures and secure all accounts impacted by the fraud. A HealthEquity spokesperson referred all questions on the situation to OPM.

The new security measures have included adding Login.gov requirements and using identity verification for anyone setting up a new account or changing their enrollments. OPM has also provided agencies with a list of personnel affected by the fraudulent charges, according to a Facebook post from the Army Benefits Center.

But even with the efforts to strengthen security, there are still employees seeing fraudulent charges in their account statements weeks after the issue was first reported.

Several federal employees told Federal News Network they did not receive any advance notice from OPM, FSAFEDS or their employing agency that the reimbursement payments would be paused.

There have also been some mixed messages regarding OPM’s response to the FSAFEDS fraud surge. For instance, in a June 13 announcement, the Coast Guard said during the hold on enrollments, “claims for reimbursement will still be permitted.”

Many employees wrote to Federal News Network expressing frustrations and concerns with the lack of communication on the FSAFEDS pause on payments. Based on multiple accounts from federal employees, it also appears that employees working at FSAFEDS themselves had limited information on the situation during the pause.

“All participant payments as of June 16 have been paused by direction of OPM until further notice. We have not been given a reason for the pause,” an FSAFEDS customer service representative wrote Tuesday in an online chat conversation with one federal employee. “OPM has paused payments and we just have to wait for them to release the pause. Believe me, I wish I had more info for you.”

Federal News Network obtained chat messages sent through the FSAFEDS customer service channel from several federal employees, under the condition of anonymity due to the sensitivity of personal health account information and the ongoing fraud in the FSAFEDS program.

“Currently, we are unaware of why OPM did not send out an email notification to our participants at this time,” an FSAFEDS representative said in a different chat conversation with a federal employee. “OPM has placed a pause on all reimbursements [and] payments with an unknown reason for an unknown length of time. Our team is aware of the financial stress this may cause for some at this time and hopefully the payments will resume back to their normal scheduled processing shortly.”

Some employees said they received notice that a claim had been accepted and that they would be getting a reimbursement payment, only to find that no payments had been made in their accounts even several days later. For instance, one federal employee, speaking anonymously, said after submitting a dependent care claim on June 20, she received a notification from FSAFEDS that the claim had been approved and processed.

“But the funds never appeared in my bank account,” the employee wrote in an email to Federal News Network. “This leaves many parents in a lurch if we planned to use our dependent care claims to offset the cost of summer child care this summer. I contribute vigorously to my dependent care accounts during the first half of the year, so I have ample funds to pay for summer child care, and now I’m having to come out of pocket to pay child care, even though I have funds in my dependent care account.”

Federal employees impacted by the pause in reimbursement payments are expected to be made whole by the end of the day on Friday.

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