Flexible Spending Accounts (FSAs)
A Flexible Spending Account (FSA) is an employer-sponsored benefit that lets you set aside pre-tax money from your paycheck to pay for eligible out-of-pocket health care (Health Care FSA) or dependent care (Dependent Care FSA) expenses, saving you money on taxes. You choose how much to contribute annually, and these funds cover things like copays, prescriptions, dental/vision, or childcare
Use it or Lose it!: There is a use it or lose it” rule imposed by the IRS. However, Bates has offered employees the option to carryover $680 of their 2026 Health Care FSA funds into 2027. So make sure you estimate your costs and contributions carefully! There is no carryover for the Dependent Care FSA.
Claim Filing Deadlines:
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- All claims for Healthcare, Limited Purpose, and Dependent Care expenses need to be submitted by March 31 of the following plan year to ensure reimbursement. If you do not file for reimbursement by this deadline, your remaining funds will be forfeited.
- Dependent Care Grace Period: The grace period extends the plan year by 2½ months. This means that for the plan year ending on December 31, 2026 you have until March 15, 2027 to incur expenses for reimbursement. You must still file for reimbursement by March 31, 2027.
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Health Care FSA
Funds can be used to pay for medical, prescription drug, dental and vision expenses that are not paid by insurance. A Health Care FSA is not available to employees who contribute to a Health Savings Account.
2026 Maximum: $3,400.
Limited Purpose FSA
Funds can be used to pay for dental and vision expenses that are not paid by insurance; a Limited Purpose FSA is an option for employees who contribute to a Health Savings Account.
2026 Maximum: $3,400
Dependent Care FSA
Funds can be used to pay for expenses associated with the care of a dependent child or adult while you are working or are searching for work.
- Eligibility: Employees with children age 12 and under who elect to contribute a minimum of $100 to the Dependent Care FSA.
- 2026 Maximum: $7,500 (single taxpayers and married couples filing jointly) or $3,750 (married couples filing separately)
- Bates Childcare Subsidy: Bates offers a childcare subsidy that is meant to help offset childcare expenses necessary to maintain employment with the College.
- Subsidy Benefit Amount: $43-$325 per month (based on total household income & number of children).
Please note, any subsidy received from the college will count towards the $7,500/$3,750 annual limit.
FSA Savings Example
Because FSA contributions are pre-tax, they reduce your taxable income. Tax savings vary depending on filing status and other variables. Here is an example of the expected annual tax savings an employee would realize based on making contributions of $1,700 or $3,400 and having a single filer tax status:
$60,000 annual pay, contributing $1,700 to FSA
| $374 | $130 | $504 |
| 22% income tax savings | 7.65% FICA tax savings | Total FSA tax savings |
$120,000 annual pay, contributing $3,400 to FSA
| $816 | $260 | $1,076 |
| 24% income tax savings | 7.65% FICA tax savings | Total FSA tax savings |