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FLEXIBLE SPENDING ACCOUNTS Open Enrollment - PowerPoint PPT Presentation

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FLEXIBLE SPENDING ACCOUNTS Open Enrollment. ENROLLMENT. Open Enrollment is usually held late October and includes the first week in November with an effective date of January 1, the following year.

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  • Open Enrollment is usually held late October and includes the first week in November with an effective date of January 1, the following year.
  • All enrollment forms must be submitted to the Benefits Coordinator by the end of open enrollment.
contributions to flexible spending accounts are pre tax
Contributions to Flexible Spending Accounts Are Pre-tax


Tax elimination – not tax deferral

what are these benefits
What are these benefits?
  • Flexible Spending Accounts, governed by the IRS, allow employees to have income withheld from their paychecks before taxes for eventual reimbursement of certain expenses. PASSHE offers two types of FSA’s – a medical reimbursement account and a dependent care reimbursement account.
dependent definition
Dependent Definition
  • Dependents include all family members whose health care expenses would be an allowable deduction on the employee’s federal income tax return.
medical reimbursement account
Medical Reimbursement Account

Employees designate the amount to be deducted from their pay to cover out-of-pocket medical expenses for self and dependents.

$3,500 annual maximum

medical reimbursement account tax savings
Medical Reimbursement Account Tax Savings
  • Federal – Approximately
  • 15% to 30%
  • State – 3.07%
  • Local – % varies
  • FICA (Social Security) - 7.65%
eligible medical expenses
Eligible Medical Expenses
  • Major Medical deductibles
  • PPO/HMO office visit co-pays
  • Prescription co-pays and deductibles
  • Dental and vision expenses
  • Lasik eye surgery
  • Hearing Aids
  • Many over-the-counter items & more
ineligible medical expenses
Ineligible Medical Expenses
  • Expenses not allowed on income tax return
  • Cosmetic surgery
  • Expenses paid through other sources
  • Insurance premiums

Example WITHOUT a Medical Reimbursement Account: Married, claiming 2 exemptions & who incurs $2000 of annual medical expenses not covered on health insurance

Gross Bi-weekly Salary $1,342.00

Bi-weekly contribution (0)

Taxable Income $1,274.90

Total Tax Withheld $240.30


Bi-weekly Tax Savings (0)

Annual Tax Savings (0)

same example with a medical reimbursement account
Same Example WITH a Medical Reimbursement Account:
  • Gross Bi-weekly Salary $1,342.00
  • Bi-weekly Contribution $76.92
  • Taxable Income $1,197.98
  • Total Tax Withheld $219.74
  • ______________________________
  • Bi-weekly Tax Savings $20.56
  • Annual Tax Savings $534.56
dependent care reimbursement account
Dependent Care Reimbursement Account

Employees designate amount to be deducted from pay to cover dependent care expenses

$5,000 annual maximum per family

dependent care reimbursement account savings
Dependent Care Reimbursement Account:SAVINGS
  • Federal – Approximately
  • 15% to 30%
  • FICA (Social Security) - 7.65%
dependent care definition
Dependent Care Definition

A dependent is defined as an individual under age 13 or a spouse or other individual who is physically or mentally unable to take care of themselves and who qualifies as a dependent for income tax purposes.

eligible dependent expenses
Eligible Dependent Expenses
  • Eligible expenses are those that enable you & your spouse (if married) to work or look for work
  • Child care centers with 6+ children (must meet IRS qualification definition)
  • Caregivers for disabled spouse or dependent living with you
  • Babysitters
  • Nursery Schools
  • Before & After school care
ineligible dependent expenses
Ineligible Dependent Expenses
  • Babysitting for social events
  • Charges for overnight camp
  • Educational expenses (kindergarten and beyond)
  • Expenses taken as child care credit on income tax return

Employee Estimates


Expenses & Enrolls in Plan

Eligible Expenses


Through Biweekly


Equal Amounts





Eligible Expenses







Files Claim for


filing claims for reimbursement
Filing Claims for Reimbursement
  • Claims must total more than $25.00 per submittal, except for claims filed after the plan year ends.
  • After this time, and before March 31, claims may be submitted for any amount, not to exceed enrolled plan allowance.
fsa enrollment
FSA Enrollment
  • Plan Year January 1 – December 31
  • Annual Open Enrollment period
  • Mid-year changes to elections only if “Status Change” defined by IRS
  • (i.e. marriage, divorce, additional dependent)
  • Must re-enroll each year to stay in medical/dependent care accounts
estimate expenses carefully
Estimate Expenses Carefully!

Funds not spent through reimbursement accounts are forfeited and used to fund plan administration.