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Agenda

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

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  1. 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

  2. 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

  3. 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

  4. 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

  5. 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

  6. 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

  7. 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

  8. 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

  9. 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

  10. 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

  11. 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

  12. 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

  13. 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

  14. 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

  15. 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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