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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. Flexible Spending Account Overview.

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Agenda l.jpg
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

The University of Arizona – Human Resources


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Flexible Spending AccountOverview

  • 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

The University of Arizona – Human Resources


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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)

The University of Arizona – Human Resources


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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

The University of Arizona – Human Resources


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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

www.irs.gov/pub/irs-pdf/p502.pdf

The University of Arizona – Human Resources


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Health Care Reimbursement AccountW. & W. Wildcat Experience*

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 347 309

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

$324

Annual savings

The University of Arizona – Human Resources


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Health Care Reimbursement AccountW. & W. Wildcat Experience*

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

$422

Annual savings

The University of Arizona – Human Resources


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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 621-4365

The University of Arizona – Human Resources


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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

      www.irs.gov/pub/irs-pdf/p503.pdf

The University of Arizona – Human Resources


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Dependent Care Reimbursement AccountW. & 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 1,507 966

State Income Tax 347 222

Social Security (FICA) Tax 2,2861,872

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

$1,080

Annual savings

The University of Arizona – Human Resources


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Dependent Care Reimbursement AccountW. & 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 4,5724,158

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

$1,412

Annual savings

The University of Arizona – Human Resources


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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

The University of Arizona – Human Resources


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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) 659-3035

  • www.asiflex.com

The University of Arizona – Human Resources


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2008 Open Enrollment

  • November 1 – 30

  • Effective January 1, 2008 through December 31, 2008

  • Enroll using Employee Link http://emplink.arizona.edu

  • Current participants must re-enroll to ensure participation in 2008

The University of Arizona – Human Resources


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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

The University of Arizona – Human Resources


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Thank you for your time

The University of Arizona – Human Resources


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