Flexible Spending Accounts (FSAs)

Learn more about our Flexible Spending Account offerings:

Health Care Flexible Spending Account (FSA)

Made possible by Section 125 of the Internal Revenue Code and subject to IRS regulations, and offered at USC through HealthEquity, health care FSAs can protect up to $3,050 a year per employee from any federal and state taxes.

Learn more about health care Flexible Spending Accounts, in English, or in Spanish.

If you’re looking for information on dependent care FSAs, visit that webpage

How it works

  • You choose an amount – up to $3,050 a year, minimum $100 – for health care expenses you think you will incur (details on what expenses qualify below).
  • Calculate expenses carefully – you can only carry over $610 from your health care account to the next year (carryover balance posts to your account on April 15th). Any unused amount above $610 in your health care account will be forfeited.
  • The amount you select is then deducted from your paycheck in equal increments over the full 12-month calendar year (except for faculty who opt to receive their base pay over a shorter cycle).
  • Enrollment is via Workday; enroll for your FSA within 30 days of hire date and every year thereafter during open enrollment (you must re-enroll each year), or when you have a life event status change.
  • If you begin an account mid-year due to enrollment as a new hire or a status change, eligible claims must be for services rendered after the effective enrollment date.
  • Because the amount you set aside in your FSA is not taxed for Social Security purposes, your future benefit from Social Security may be reduced slightly.
  • You have until March 31st to submit claims for services rendered in the prior year.

Eligible expenses

Health Care FSA accounts are for expenses incurred by you or your eligible dependents (as defined by the IRS) and include:

  • Medical and dental plan deductibles
  • Copayments
  • Prescriptions
  • Certain over-the-counter medicines if prescribed
  • Other health care expenses not covered by your insurance (most expenses that the IRS considers tax deductible are eligible, but not all)
  • www.healthequity.com/wageworks for a complete list of eligible healthcare expenses.

Expenses that are NOT eligible

  • Medical and dental insurance premiums
  • Expenses associated with cosmetic surgery
  • Expenses incurred for ineligible dependents or others not in your family

How To Access Health Care FSA Money 

  • Pay with your FSA Debit card
  • Request reimbursement- Online or paper forms

Refer to the HealthEquity website for more information.

FSA forms/documents

Contact information

HealthEquityhttps://healthequity.com
877-924-3967

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Dependent Care Flexible Spending Account (FSA)

Made possible by Section 125 of the Internal Revenue Code and subject to IRS regulations, and offered at USC through HealthEquity, a dependent care FSA can protect up to $5,000 a year per household* from any federal or state taxes. If you pay for dependent care so you can work, this FSA may save you money.

Learn more about Dependent Care Flexible Spending Accounts in English, or in Spanish.

If you’re looking for information on health care FSAs, visit that webpage.

How it works

  • You choose an amount – up to $5000 a year per household – for dependent care expenses.
  • Calculate expenses carefully – any unused amount remaining in your dependent care account at the end of the calendar year will be forfeited.
  • The amount you select is then deducted from your paycheck in equal increments over the full 12-month calendar year (except for faculty who opt to receive their base pay over a shorter cycle).
  • Enrollment is via Workday; enroll for your FSA within 30 days of hire date, and every year thereafter during open enrollment (you must re-enroll each year), or when you have a life event status change.
  • If you begin an account mid-year due to enrollment as a new hire or a status change, eligible claims must be for services rendered after the effective enrollment date.
  • Because the amount you set aside in your FSA is not taxed for Social Security purposes, your future benefit from Social Security may be reduced slightly.
  • Eligible dependents include children under age 13, and any dependents (child, spouse, parent, grandparent, brother, sister, etc.) unable to care for themselves because of a disability who spend at least 8 hours a day in your home
  • If you are married, both spouses must work in order to qualify, and the amount set aside cannot exceed your earned income or your spouse’s earned income, whichever is less.
  • You also qualify if your spouse is a full-time student, or physically or mentally disabled – under these circumstances, you generally may set aside up to $200 a month for one dependent and up to $400 a month for two or more dependents.

*Special Limits to the Dependent Care FSA for Highly Compensated Faculty and Staff

The IRS allows pre-tax contributions to Flexible Spending Accounts as long as the plan does not favor highly-compensated employees (HCE) as defined by the IRS. 

For the 2023 calendar year, an employee who earns more than $135,000 is considered an HCE. Earnings subject to the $135,000 threshold include all pre-tax W2 wages, before qualified pre-tax deductions such as employee contributions to benefits, qualified pre-tax withholdings, or retirement plan deferrals.

If you are an HCE, your Dependent Care FSA deduction may not exceed $3,600 per family for a married couple filing jointly, or for a single parent. For an HCE married person filing separately, the limit is $2,500. 

Please note: Each year FSA plans must pass a non-discrimination test to show they do not favor highly compensated employees regarding eligibility, contributions, and benefits. If USC’s plans do not pass the test, USC may reduce your election(s) during the year if you are a highly compensated employee as defined by the Internal Revenue Code. Benefits will notify you if it becomes necessary to reduce your contributions.

Eligible expenses

  • Daycare
  • Babysitters
  • Companions
  • Before/after school care

Expenses that are NOT eligible

  • Educational programs
  • Sleepover camps
  • Transportation

When can you use the money

Unlike a health care FSA, money is not paid in advance – your dependent care expenses are only reimbursed up to the current balance in your account. However, if you leave USC employment, expenses incurred in the previous year can be submitted following your termination date subject to the filing requirements below.

The IRS requires you to provide a receipt that includes the name, address, and taxpayer identification number of the person or organization providing your daycare services. Be aware that your W2 tax form will reflect the amount set aside in your dependent care FSA. Also, the money you set aside in a dependent care FSA will reduce – dollar for dollar – the maximum amount of expense you can apply toward the federal dependent care credit on your income tax return. Consult your tax advisor.

Dependent care services must be rendered by December 31 of the calendar year in order to qualify – there is no grace period.

FSA forms/documents

FSA dependent care claim

Contact Information

WageWorks | www.wageworks.com
(877) 924-3967

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