Don’t Overlook the Tax Benefits Hiding in Your Federal Health and Insurance Choices

Hi Friends, Mike Lanway here with AllAboutFERS.com

Every year, Open Season rolls around for federal employees—and while most people glance at their options, maybe update a plan here or there, very few stop to ask a deeper question:

What are the tax advantages of this benefit?

I want to offer a fresh perspective today. If you’re a FERS employee, you’re in a unique position to make decisions that don’t just protect you and your family—they also quietly lower your tax bill. And Open Season is your window to lean into that opportunity.

Why Open Season Is More Than Just Picking a Health Plan

Let’s start with a basic truth: your benefits are part of your total compensation.

That means every time you make a decision about your health insurance, dental, vision, or other voluntary benefits, you’re not just choosing coverage—you’re affecting your monthly take-home pay, your long-term financial security, and your tax picture.

And yet, most federal employees never frame it that way. We tend to think:

• “Will this cover my prescriptions?”
  
• “Is my dentist in the network?”
  
• “What’s the premium?”

These are good questions. But here’s one more that might make a big difference in your long-term planning:

“What’s the tax impact of this benefit?”

Tax Savings Built into Your FERS Benefits

When you enroll in certain federal benefits—especially during Open Season—you’re often paying premiums with pre-tax dollars. That means the money is deducted from your paycheck before taxes are calculated, reducing your taxable income and potentially saving you hundreds, even thousands, over the course of a year.

Here are a few places to look:

• FEHB (Federal Employee Health Benefits): Most plans are paid pre-tax.
  
• FEDVIP (Dental and Vision): Some options offer pre-tax deductions, depending on your agency’s payroll setup.
  
• FSAFEDS (Flexible Spending Accounts): These allow you to pay for out-of-pocket medical or dependent care expenses using pre-tax dollars.
  
• TSP Contributions (Traditional): Lower your taxable income today while saving for tomorrow.
  

These are powerful tools—not just for managing your health or preparing for emergencies—but for reducing your tax burden year after year.

Don’t Ignore the Benefits You Might Actually Use

Let me offer a simple rule of thumb: If you’re going to use the benefit anyway, and it also reduces your taxes, it’s likely worth it.

So as you evaluate your health insurance or dental plan this Open Season, don’t just ask: Is this plan right for my needs?

Also ask: If I enroll and use it, am I also saving money on taxes I would otherwise pay?

The key is to be intentional. Don’t let Open Season pass you by with a quick glance or default choices. This is your opportunity to think strategically.

We’re Building a Library Just for You

At AllAboutFERS.com, we’re not here to lecture or give you one-size-fits-all advice. Our goal is to help you think differently—to give you insights that help you make better decisions about:

• Your career
  
• Your money
  
• And your long-term future
  

That’s why we’re building a library of resources—short videos, planning tools, and articles just like this—to help you learn what’s possible and feel confident in the choices you make.

So when Open Season comes around, you don’t have to guess. You don’t have to wing it. You can move forward with clarity and peace of mind.

You’re Not Alone in This

If you’re a FERS employee and these decisions feel heavy or confusing, you’re not the only one. That’s why we’re here. We’ve spent years walking alongside federal employees, helping them find that peace of mind—one benefit, one choice at a time.

Take a look at our videos, browse the articles, and start thinking about how your benefit choices could be helping your taxes, your budget, and your bigger financial picture.

All my best,
Mike Lanway