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Jackie Faine Human Resources, Compensation and Benefits 2008 Open Enrollment Flexible Spending Accounts More Take-Home Pay Through Tax Savings.

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Presentation on theme: "Jackie Faine Human Resources, Compensation and Benefits 2008 Open Enrollment Flexible Spending Accounts More Take-Home Pay Through Tax Savings."— Presentation transcript:

1 Jackie Faine Human Resources, Compensation and Benefits 2008 Open Enrollment Flexible Spending Accounts More Take-Home Pay Through Tax Savings

2 November 2008 The University of Arizona – Human Resources 2 Agenda  A Flexible Spending Account overview  How it works  Health Care reimbursement account  Dependent Care reimbursement account  Important planning information  Submitting claims for reimbursement  2008 Open Enrollment information  Resources

3 November 2008 The University of Arizona – Human Resources 3 Flexible Spending Account Overview  Employer-sponsored plan  Pre-tax payroll deductions deposited into the Flexible Spending Account  Use these dollars for reimbursement of qualified out-of-pocket expenses  Pay less taxes  Increase your take-home pay  Two kinds of accounts –Health Care reimbursement account –Dependent Care reimbursement account

4 November 2008 The University of Arizona – Human Resources 4 Health Care Reimbursement Account Overview  Reimbursement for qualified expenses  IRS definition “…costs of diagnosis, cure, mitigation, treatment, or prevention of disease, and the costs for treatments affecting any part of the body.” IRS Pub. 502  Includes: Medical, Dental, Prescription, Vision, Hearing, and Over-the-counter medications (under certain circumstances)

5 November 2008 The University of Arizona – Human Resources 5 Health Care Reimbursement Account Process  Estimate annual out-of-pocket expenses not covered by insurance –no minimum contribution per paycheck –$5,000 maximum annual contribution  Enroll in Flexible Spending Account in November  Incur eligible out-of-pocket expenses in 2008  File claims and receive reimbursement

6 November 2008 The University of Arizona – Human Resources 6 Health Care Reimbursement Account Sample Expenses  Office visit co-pay  Health care deductible  Prescription co-pay  Orthodontia expenses  Prescription eyeglass and contact lenses  Acupuncture  Blood pressure monitor  Hearing aids  Over-the-counter medications (purchased to treat an existing or imminent medical condition) –Allergy, cold, cough, flu, nasal, sinus –Diabetic supplies –Denture adhesive –Sleeping aids –Pain relievers, aspirin and non-aspirin IRS Publication 502: Medical and Dental Expenses

7 November 2008 The University of Arizona – Human Resources 7 Without FSA With FSA Annual Salary $30,000 $30,000 Office visits$ 150 Prescription co-pays$ 500 Dental deductibles$ 100 Prescription glasses/contacts$ 600 Over-the-counter medication$ 150 Total out of pocket expenses $1,500 Pre-tax deduction 0 1,500 Taxable Income$30,000 $28,500 Federal Income Tax 1,507 1,345 State Income Tax Social Security (FICA) Tax 2,286 2,162 Total taxes 4,140 3,816 Net paycheck$25,860 $24,684 After-tax expenses 1,500 0 Actual take-home pay$24,360 $24,684 *Sample uses married with two exemptions; savings varies depending on employee’s tax situation Annual savings $324 Health Care Reimbursement Account W. & W. Wildcat Experience*

8 November 2008 The University of Arizona – Human Resources 8 Without FSA With FSA Annual Salary $60,000 $60,000 Office visits$ 150 Prescription co-pays$ 500 Dental deductibles$ 100 Prescription glasses/contacts$ 600 Over-the-counter medication$ 150 Total out of pocket expenses $1,500 Pre-tax deduction 0 1,500 Taxable Income$60,000 $58,500 Federal Income Tax 5,976 5,734 State Income Tax 1,375 1,319 Social Security (FICA) Tax 4,572 4,448 Total taxes 11,923 11,501 Net paycheck$48,077 $46,999 After-tax expenses 1,500 0 Actual take-home pay$46,577 $46,999 *Sample uses married with two exemptions; savings varies depending on employee’s tax situation Annual savings $422 Health Care Reimbursement Account W. & W. Wildcat Experience*

9 November 2008 The University of Arizona – Human Resources 9 Dependent Care Reimbursement Account Overview  Reimbursement for qualified dependent care expenses that are –necessary to allow you to work or look for work –necessary to allow your spouse to work, look for work, or be a full-time student  Must have custody of dependent more than 50 percent of the year  Special considerations for UA Child Care Voucher Program participants –http://lifework.arizona.edu/cc/ee_prog/CC_Voucher_ Prog_Guidelines.pdf –Contact UA Life & Work Connections, at

10 November 2008 The University of Arizona – Human Resources 10 Dependent Care Reimbursement Account Sample Expenses  Child care  Nanny service  Nursery school  Elder care  Expenses may be paid to a relative (child, parent or grandparent of participant) IF –caregiver is not under age 19 –caregiver is not a tax dependent of the participant IRS Publication 503: Child and Dependent Care Expenses

11 November 2008 The University of Arizona – Human Resources 11 Dependent Care Reimbursement Account W. & W. Wildcat Experience* Without FSA With FSA Annual Salary$30,000 $30,000 Total dependent care expense $5,000 Pre-tax deduction 0 5,000 Taxable Income$30,000 $25,000 Federal Income Tax 1, State Income Tax Social Security (FICA) Tax 2,286 1,872 Total taxes 4,140 3,060 Net paycheck$25,860 $21,940 After tax expenses 5,000 0 Actual take-home pay$20,860 $21,940 * Sample uses married with two exemptions; savings varies depending on employee’s tax situation Annual savings $1,080

12 November 2008 The University of Arizona – Human Resources 12 Dependent Care Reimbursement Account W. & W. Wildcat Experience* Without FSA With FSA Annual Salary$60,000 $60,000 Total dependent care expense $5,000 Pre-tax deduction 0 5,000 Taxable Income$60,000 $55,000 Federal Income Tax 5,976 5,165 State Income Tax 1,375 1,188 Social Security (FICA) Tax 4,572 4,158 Total taxes 11,923 10,511 Net paycheck$48,077 $44,489 After tax expenses 5,000 0 Actual take-home pay$43,077 $44,489 * Sample uses married with two exemptions; savings varies depending on employee’s tax situation Annual savings $1,412

13 November 2008 The University of Arizona – Human Resources 13 Important Planning Information  Use care when estimating expenses  Be conservative  Review, consider current year expenses  Do you anticipate similar expenses for 2008?  Use the worksheet  Track expenses in 2008 for enrollment in 2009

14 November 2008 The University of Arizona – Human Resources 14 Who is ASI?  Third party administrator –Answers questions about this plan –Receives, reviews and approves claims –Sends reimbursement directly to you through Direct deposit Check mailed to your home address  (800) 

15 November 2008 The University of Arizona – Human Resources Open Enrollment  November 1 – 30  Effective January 1, 2008 through December 31, 2008  Enroll using Employee Link  Current participants must re-enroll to ensure participation in 2008

16 November 2008 The University of Arizona – Human Resources 16 Resources …  HR website (plan information) –www.hr.arizona.edu  Employee Link (to enroll) –http://emplink.arizona.edu  ASI (claims information) –www.asiflex.com  IRS Pub. 502 (medical/dental care) –www.irs.gov/pub/irs-pdf/p502.pdf  IRS Pub. 503 (dependent care) –www.irs.gov/pub/irs-pdf/p503.pdf


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