It may be the most underused good deal in the government. But less than 5 percent of eligible Department of Defense civilians have enrolled to use flexible-spending accounts.

The benefit, also known as FSAFEDS, allows federal employees to set aside pre-tax money for a wide rage of medical and dependent-care expenses.

The FSAFEDS Open Season runs through Dec. 12. About 700,000 DOD civilians are eligible for the program. Right now there are 33,561 defense employees enrolled, officials said.

Taking the money off the top means the government calculates a person’s taxes at a lower level, said Chris Ryan, vice president for marketing with SHPS, the firm that administers the federal program. Essentially, federal employees in the program reserve a tax-free portion of their salaries to pay out-of-pocket medical or dependent-care expenses.

There are two types of flexible-spending accounts. The Health Care FSA allows employees to pay for medical expenses not covered by insurance. For example, most insurance programs have co-pays. That money can be reimbursed via the flexible-spending account. The FSA can also reimburse for prescriptions, glasses or eye care, dental procedures, orthodontia, medical screening tests, and even nonprescription over-the-counter medicines.

A second account is for dependent care. This reimburses employees for expenses incurred for child care or elder care.

The money put into accounts is exempt from federal income taxes, Social Security taxes and Medicare taxes. FSAs are also exempt from most state and local taxes, with the notable exceptions being New Jersey and Puerto Rico. Pennsylvania taxes the portion placed in dependent care FSAs. The money will not show up on yearly W-2 forms.

Few federal employees have participated in the program. One reason could be a fear of losing unused funds. If users overestimate expenses and money is left in the account at the end of the effective period, that money is lost. For the 2006 plan, the effective period runs from Jan. 1, 2006, to March 15, 2007.

If a participant elects to put $2,000 in an FSA medical account and only uses $1,700, the individual loses the extra $300.

"There are very few people who lose money," Mr. Ryan said. "Most people involved in the program monitor their expenditures very closely. They also monitor their health very carefully."

The possibility of losing the money is one reason employees must sign up for the program each year.

"People can change what they wish to put in to the program each year," Mr. Ryan said. So if, for example, a family finds that it exhausts a $2,000 account by September, the employee may increase the amount the next year.

Employees can also increase the program for just one year. "If someone knows the kids are going to need braces, then increasing the FSA will help," he said.

"Many people think that if they sign up once, they are in the program for life," Ryan said. "This is not the case."

There are significant changes in the program this year from the past. Employees can elect to pay $5,000 into the accounts, up from $4,000, and can file claims against the new year's account through May 31, 2007.

The process for filing for reimbursement is relatively simple. Participants must keep receipts for eligible expenses and send them to SHPS with a claim form. SHPS personnel process the forms in the order they arrive and pay the money directly into bank accounts within a week.

Employees who want to enroll in the program can get more information online at www.fsafeds.com or via toll-free (877) FSA-FEDS or (877) 372-3337. The Web site also has an online calculator that can give employees an idea of savings they can earn.