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PA STATE SYSTEM OF HIGHER EDUCATION OPEN ENROLLMENT FLEXIBLE SPENDING ACCOUNTS AND HEALTH CARE PLANS FALL 2004 Open Enrollment Dates Flexible Spending Accounts October 25 – November 5 State System Group Health Program October 25 – November 5 PEBTF Health Care

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pa state system of higher education
PA STATE SYSTEM OF HIGHER EDUCATION

OPEN ENROLLMENT

FLEXIBLE SPENDING ACCOUNTS

AND

HEALTH CARE PLANS

FALL 2004

open enrollment dates
Open Enrollment Dates
  • Flexible Spending Accounts
    • October 25 – November 5
  • State System Group Health Program
    • October 25 – November 5
  • PEBTF Health Care
    • October 25 – November 12
slide3
All open enrollment changes

are effective

January 1, 2005

pa state system of higher education4
PA STATE SYSTEM OFHIGHER EDUCATION

FLEXIBLE SPENDING ACCOUNTS

OPEN ENROLLMENT

section 125 plan
Section 125 Plan

Flexible

Spending

Account

Premium

Conversion

Plan

Medical

Reimbursement

Account

Dependent Care

Reimbursement

Account

contributions to flexible spending accounts are pre tax
Contributions to Flexible Spending Accounts Are Pre-tax

Taxes

Taxes

Taxes

Tax elimination – not tax deferral

medical reimbursement account
MedicalReimbursementAccount
  • Employees designate amounts to be deducted from pay to cover out-of-pocket medical expenses for self and dependents
  • $3,000 annual maximum
savings

MedicalReimbursementAccount

Savings
  • Federal - 15% - 30%
  • State – 3.07%
  • Local – % varies (except Philadelphia City)
  • FICA (Social Security) - 7.65%
medical reimbursement account9
MedicalReimbursementAccount

Dependent Definition

  • All family members whose health care expenses can be deducted on Federal income tax returns
eligible medical expenses
Eligible Medical Expenses
  • Major Medical deductibles
  • PPO/HMO office visit co-pays
  • Prescription co-pays and deductibles
  • Dental/vision expenses
  • Lasik eye surgery
  • Many over-the-counter items
ineligible medical expenses
Ineligible Medical Expenses
  • Expenses not allowed on income tax return
  • Cosmetic surgery
  • Expenses paid through other sources
  • Insurance premiums
slide12

Dependent Care

Reimbursement

Account

  • Employees designate amounts to be deducted from pay to cover dependent care expenses
  • $5,000 annual maximum
savings13

Dependent Care

ReimbursementAccount

Savings
  • Federal - 15% - 30%
  • FICA (Social Security) - 7.65%
dependent care reimbursement account

Dependent Care

ReimbursementAccount

Dependent CareReimbursementAccount

Dependent Definition

  • Dependent under age 13 who qualifies as a dependent for Federal income tax purposes
  • Spouse or other individual unable to care for self who qualifies as a dependent for Federal income tax purposes
eligible dependent expenses
Eligible Dependent Expenses
  • Child care centers with 6+ children (must be IRS qualified)
  • Caregivers for disabled spouse or dependent living with employee
  • Babysitters
  • Nursery Schools
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
slide17

Employee Estimates

Annual

Expenses

Eligible Expenses

Reimbursed

Through Biweekly

Paycheck

Equal Amounts

Deducted

From

Paychecks

How It Works

Expenses

Reviewed for

Eligibility

Employee/

Dependent

Incur

Expenses

Employee

Files Claim for

Reimbursement

fsa enrollment
FSA Enrollment
  • Annual enrollment periods
  • Changes to elections only if

“Status Changes” defined by IRS

  • Must re-enroll each year to stay in medical/dependent care accounts
plan year january 1 december 31
Plan Year January 1 - December 31

Claims incurred through December 31

must be submitted for reimbursement

by March 31 of the following plan year

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

Estimate Expenses

Carefully!!!

premium conversion plan
PremiumConversionPlan

Employees’ health care contributions are paid

pre-tax

savings23

PremiumConversionPlan

Savings
  • Federal - 15% - 30%
  • State – 3.07%
  • Local – % varies(except Philadelphia City)
  • FICA (Social Security) - 7.65%
slide24

PremiumConversionPlan

  • Employees elect when enrolling in health care plan
  • Pre-tax treatment continues unless employee changes option