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Flexible Spending Accounts

FSA Savings Can Really Add Up

The benefits offered by the University of California include flexible spending accounts (FSAs) that allow you to increase your take-home pay by using pre-tax dollars to pay for eligible FSA expenses for you, your spouse, and qualifying children or relatives.

How an FSA Works

You set aside money for your FSA from your paycheck before taxes are taken out*. Then you use your pre-tax FSA funds throughout the plan year to pay for eligible health care or dependent care expenses. You save money on expenses you're already paying for.

Examples of Eligible Health FSA Expenses

  • Medical expenses: co-pays, co-insurance, and deductibles
  • Dental expenses: exams, cleanings, X-rays, and braces
  • Vision expenses: exams, contact lenses and supplies, eyeglasses, and laser eye surgery
  • Professional services: physical therapy, chiropractor, and acupuncture
  • Prescription drugs and insulin
  • Over-the-counter health care items: bandages, pregnancy test kits, blood pressure monitors, etc.

See more examples on our Health FSA Expenses page.

Learn more about Health FSAs by visiting our Health FSA page.

Examples of Eligible Dependent Care Expenses

  • Care for your child who is under age 13
    • Before and after-school care
    • Baby sitting and nanny expenses
    • Day care, nursery school, and preschool
    • Summer day camp
  • Care for a relative who is physically or mentally incapable of self-care and lives in your home

See more examples on our Dependent Care FSA Expenses page.

Learn more about DepCare FSAs by visiting our Dependent Care FSA page.

More Money in Your Paycheck

Your increased annual take-home pay and FSA savings depend on your income tax bracket. Assuming you pay a 30 percent combined state and federal tax rate, you can save $30 for every $100 that you put into your FSA. Put $1,000 in your FSA, and you can increase your annual take-home pay by as much as $300*.

FSAs benefit everyone - single individuals, families, and soon-to-be retirees. Check out how other people save money on our FSA Savings Examples page.

Health FSA Carryover

IRS rules allows you to carry over up to $500 of unused Health FSA funds from one plan year to the next. This feature offers several advantages.

As long as you are an active employee and eligible to participate in the Health FSA plan, you may carry over the maximum amount allowed by the UC FSA plan - that's $500. If you plan to re-enroll for the following year, you can spend your carryover dollars until the account has a zero balance. However, if you do not re-enroll in the Health FSA, you must have at least $25 from the prior plan year in your account at the end of the run-out period to be enrolled in the carryover plan and will only be allowed to carry over funds for one year.

Please note: IRS rules do not allow a Health FSA plan to have both a carryover feature and grace period. The grace period only applies to the DepCare FSA, which does not include the carryover feature (per IRS rules).

FSA Guidelines

FSAs are regulated by IRS rules. The rules state that you can only use your FSA funds for IRS-approved expenses during the FSA coverage period, unless you carry over $500 from your Health FSA to the following year. You must keep all receipts and other supporting documentation that verify your FSA eligible expenses.

Be sure to review the rest of this site to ensure you are familiar with the rules before enrolling in the plan.

* FSA contributions are deducted before federal and most state taxes. Savings vary depending on your tax bracket. Check with your tax advisor for details regarding your state taxes and your tax savings.