Flexible Spending Account
Would you be interested in a plan that helps you pay out-of-pocket medical costs on a tax-exempt basis? We offer such a plan - it's called a health care flexible spending account.
How It Works
If you choose to participate, you will elect to have a specified amount of money deducted from you paycheck each pay period on a "pre-tax" basis. Because the money is taken out of your check before taxes, your taxable income is reduced. The funds you contribute are added to a reimbursement account that is non-taxable. Later, when you incur a qualified expense, you are reimbursed from this account. Therefore, you pay fewer taxes and increase your take home pay. The annual elected amount is available to the employee from the first day of enrollment in the account. Eligible employees can elect to redirect up to $5,000/year into a Medical Flexible Spending Account.
A health care FSA may be used to pay qualified health care expenses not covered under any other plan. Examples of "qualified expenses" include (see IRS Publication 502 for a more complete description of qualified expenses):
- Health plan deductibles and co-pays
- Non-covered qualified health care expenses, such as routine physicals, oral contraceptives, Dental plan deductibles and co-pays
- Non-covered qualified dental expenses, such as orthodontia expenses for dependent children, etc.
- Vision care expenses, including glasses or contact lens and supplies, corrective refractive surgery, etc.
- Individual psychiatric counseling
- Special education, devices or instructions for the blind and/or deaf.
The "Use it or lose it " rule:
If you contribute dollars to a flexible spending account and do not use all of the monies you deposit, you will lose any remaining balance in the account at the end of the plan year.
A very important thing to remember…the rule exists because the IRS has established strict guidelines on plans with tax advantages. Estimate carefully the amount you want to contribute, and only contribute dollars that you are confident will be used before the end of the plan year. Proper planning enables you to take full advantage of the program with minimal risk of forfeiting monies contributed.
If you pay for dependent care, you may be in line for a tax break that will put more money in your pockets. Our flexible benefits plan offers you the option of participating in a dependent care reimbursement plan.
How It Works
A dependent care plan allows you to set aside pretax money each month to help pay your dependent care costs. Because the money is taken out of your check before taxes, your taxable income is reduced. The funds you contribute are added to a reimbursement account that is non-taxable. Later, when you pay for the care of a qualified dependent, you are reimbursed from this account. Therefore, you pay fewer taxes and increase your take home pay. Access to money in the account is available as soon as payroll contributions are made.
There are some limitations to a dependent care reimbursement plan. Examples include a maximum contribution of $5,000 per family for a married couple filing jointly or for a single parent. For a married person filing separately, the limit is $2,500. In addition, the dependent care must enable you and your spouse to be employed and the service must be for the physical care of the child, not for education, meals, etc.