Guide to Flexible Spending Accounts (FSAs) for University Employees

Guide to Flexible Spending Accounts (FSAs) for University Employees

Flexible Spending Accounts (FSAs) are beneficial for university employees to allocate pre-tax funds for eligible medical and dependent care expenses. Here's how FSAs function and how you can maximize their benefits:

What is an FSA?

An FSA is an employer-sponsored program allowing employees to contribute pre-tax salary to an account for eligible out-of-pocket medical and dependent care expenses.

Types of FSAs:

• Healthcare FSA: Covers eligible medical expenses not covered by insurance, like deductibles, copayments, and prescription medications.
• Dependent Care FSA: Covers eligible dependent care expenses, including daycare, preschool, and elder care services.

Benefits of FSAs:

• Tax Savings: Contributions are pre-tax, reducing taxable income and lowering taxes.
• Cost Savings: FSA funds help save on healthcare and dependent care costs.
• Convenience: FSAs offer a convenient way to budget and pay for expenses throughout the year.

How to Use an FSA:

1. Enrollment: Enroll during open enrollment or a qualifying event.
2. Contribution Limits: Follow IRS-determined maximum contribution limits each year.
3. Expense Reimbursement: Submit requests to the FSA administrator for reimbursement of eligible expenses.
4. Keep Records: Maintain records and receipts to substantiate claims and comply with IRS regulations.
5. Plan Carefully: Plan contributions to avoid forfeiting unused funds due to the "use it or lose it" rule.

Utilizing FSAs allows university employees to save on healthcare and dependent care expenses with the convenience of pre-tax contributions and reimbursements.