FSAFEDS resumes payments after 10-day suspension of refunds

For more than a week, federal employees enrolled in FSAFEDS have not received payments for approved reimbursement requests submitted to their Flexible Spending Accounts.

Under the program, all refund payments have been suspended starting June 16 to further strengthen anti-fraud and security measures, a government source confirmed to Federal News Network on condition of anonymity.

“Currently, FSAFEDS is holding all claim payments out of an abundance of caution,” FSAFEDS wrote in a post on X on Tuesday. “FSAFEDS has taken this action because fraudulent claim payments were recently uncovered. We are working to resolve and restore all claim payment activity as quickly as possible.”

However, the suspension of reimbursement payments has been lifted and payments to employees should resume soon, Federal News Network learned. FSAFEDS plans to process all currently suspended reimbursements by the end of the week.

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

The suspension of payments follows a recent surge in fraudulent activity in the FSAFEDS program, affecting hundreds of employee accounts, and comes weeks after the Office of Personnel Management, which administers the program, suspended all new FSAFEDS enrollments.

OPM said it is working with third-party vendor HealthEquity, which administers the FSAFEDS program, to strengthen security measures and secure any accounts affected by the fraud. A HealthEquity spokesperson referred all questions about the situation to OPM.

The new security measures include implementing Login.gov requirements and using identity verification for anyone setting up a new account or changing their registrations. According to a Facebook post from the Army Benefits Center, OPM has also provided authorities with a list of employees affected by the fraudulent charges.

But despite all efforts to increase security, employees still find fraudulent charges on their bank statements weeks after first reporting the problem.

Several federal employees told Federal News Network they had not received advance notice of the suspension of reimbursement payments from OPM, FSAFEDS or their employer agency.

There have also been some conflicting reports regarding OPM’s response to the rise in FSAFEDS fraud. For example, in a June 13 statement, the Coast Guard said that “refund requests will continue to be accepted” during the enrollment freeze.

Many employees wrote to the Federal News Network expressing frustration and concern about the lack of communication regarding the FSAFEDS payment pause. Several reports from federal employees indicate that even during the pause, FSAFEDS employees had limited information about the situation.

“All participant payments have been suspended as of June 16th at the direction of OPM until further notice. We have not been given a reason for the suspension,” a FSAFEDS customer service representative wrote in an online chat with a federal employee on Tuesday. “OPM has suspended payments and we just have to wait for them to lift the suspension. Believe me, I wish I had more information for you.”

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

“At this time, we do not know why OPM did not send an email notification to our participants at this time,” a representative from FSAFEDS said in another chat conversation with a federal employee. “OPM has paused all refunds (and) payments for an unknown duration for an unknown reason. Our team is aware of the financial burden this may be causing for some at this time and we hope to have payments processed as scheduled again shortly.”

Some employees said they received a notification that an application had been accepted and they would receive a reimbursement, only to discover several days later that payments had not yet been received in their accounts. For example, one federal employee who wished to remain anonymous said that after submitting an application for care benefits on June 20, she received a notification from FSAFEDS that the application had been approved and processed.

“But the funds never showed up in my bank account,” the employee wrote in an email to Federal News Network. “This leaves many parents in the lurch when we were planning to use our foster care benefits to cover the cost of summer care. I pay heavily into my foster care benefits during the first half of the year so I have enough money to pay for summer care, and now I have to pay for child care out of pocket even though I have money in my foster care account.”

Federal employees affected by the suspension of reimbursement payments are expected to receive their compensation by Friday evening.

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