2 Tax SaverTwo Levels of Participation:Premium OnlySpending Accounts
3 Premium Only Allows employees to shelter premiums for: Health InsuranceGroup Benefits Life Ins.*Dental InsuranceVision Insurance*Excludes Dependent Premium
4 How do I save? With FSA No FSA Monthly Gross $2,000.00 Pre-Tax Premium $482.88Taxable Income$1,517.12Taxes (21.5%)$326.18400.00Monthly Savings$103.82$0.00Annual Savings$1,245.84
5 Stipulations:IRS rules state that you will not be allowed to make changes to your tax sheltered insurances unless you incur a change in status or,During the Annual Enrollment Period.
6 Status Change Examples: Change in Marital Status – Marriage, Divorce, Legal Separation, AnnulmentChange in the number of tax dependents – Birth, Adoption, DeathChange in employment status of employee, spouse, or dependents – Termination, LWOP, FMLA, F/T to P/T
7 When May I Enroll? During Annual Enrollment or Within 30 days of a change in family status
8 Premium OnlyNo Cost to ParticipateNo Reenrollment
10 HC Eligible Expenses: Medical deductibles and co-payments (office visits, physicals, etc.)Dental expenses(check-ups, cleanings, braces)Vision expenses(exams, glasses, contacts)Prescription drugs
11 How Do I Save? With HC Acct W/out HC Acct Annual Pay $30,000.00 Spending Account Contribution$2,000.000.00Taxes Paid (21.5%)$6,020.006,450.00After Tax Expenses2,000.00Income$21,980.00$21,550.00Savings$430.00
12 HC Acct vs. Tax DeductYou may only claim medical expenses that are in excess of 7.5% of your gross income and you are required to itemize to take the deduction (7.5% of a $30,000 is $2,250).The minimum for the HC account is $100 per year so you can reap the tax benefits without having to contribute a large amount of money.
13 HC Acct and InsurancePrescriptionsDeductiblesCo-PaysCo-Insurances
14 Spending AccountsDependent Care – Cost of care for children & elderly adults to enable you to work.
15 DC – Eligible Expenses Day-Care for Pre-K age or under. Before/After School care for children up to age 12.Summer Camp (up to age 12).Care for an elderly adult.
16 Spending Account Contributions DC Example:With DC AcctW/out DC AcctAnnual Pay$30,000.00Spending Account Contributions$5,000.000.00Taxes Paid (21.5%)$5,375.006,450.00After Tax Expenses5,000.00Income$19,625.00$18,550.00Savings$1,075.00
17 DC Acct vs. Tax DeductIf you claim the DC expenses as a tax deduct, the maximum expenses allowed is $3, for one dependent and $6, for two or more.
18 % Credit of expenses up to max. DC Acct vs. Tax DeductGross Annual Salary% Credit of expenses up to max.Maximum1 dep / 2 or more15, or less35%/30,000.0027%/43,001.0020%/
19 Example:If your gross annual income is $30, and you have one child in daycare with annual expenses of $5, your savings, under the tax saver plan, would equal $1, and your savings under the Tax Credit would be $
20 Spending Acctount Fees $ 5.10 per month$ Must reenroll each year
21 Annual Contribution Annual Maximum: *Health Care Acct. - $2,500 Max *Dependent Care Acct. - $5,000 MaxAnnual Minimum:*HC and/or DC acct. is $
22 Flexibility Debit Card Change in Family Status Grace Period *Employees may enroll, change accounts and/or amounts, or choose to discontinue participation during the April open enrollment period prior to each plan year. Once elections are made, they can only be changed if the participant experiences a qualifying change in family status.
23 Use It or Lose ItPlan members should estimate their expenses carefully because remaining funds at the end of the plan year are forfeited.