Benefits forThomas Jefferson Classical Academy

Flexible Spending Accounts (FSA)

HEALTH CARE FLEXIBLE SPENDING ACCOUNT

 

A plan that enhances your benefits

Would you be interested in a plan that helps pay out-of-pocket medical costs while increasing your spendable income? Your employer is offering such a plan – it’s called a health care flexible spending account. This benefit qualifies under Code Section 125 of the IRS. Code Section 125 was created by the United States Congress to make benefits more affordable for you.

How it works

If you participate, you will elect to have a specified amount of pretaxed money deducted from your paycheck each pay period. These dollars are set aside in a reimbursement account and subtracted from your gross earnings before any taxes are taken out. After you submit a receipt for a qualifying health care expense, you will be reimbursed from this account.

 

FSA SAVINGS EXAMPLE

Sam’s Annual Salary: $35,000

Out-of-Pocket Medical Expenses: $1,000/year

Out-of-Pocket Dependent Care Expenses: $1,500/year

 

HEALTHCARE FSA: ELIGIBLE EXPENSES

Eligible Expenses:

  • – Co-pays and deductibles
  • – Medical office visits
  • – Prescription drugs
  • – Dental/orthodontia care
  • – Vision care
  • – Vaccinations
  • – Smoking cessation programs

Ineligible Expenses:

  • – Insurance premiums
  • – Cosmetic procedures
  • – Personal hygiene products
  • – Vitamins/supplements
  • – Diet products/food
  • – Health club fees

OTC drugs/medications require a prescription or a Prescription Order Form to be Eligible for FSA reimbursement.

See complete listing of eligible items at www.tascoline.com/eligible-expenses/

 

The “Use It or Lose It” Rule

If you contribute dollars to a flexible spending account and do not use all the money you deposit, you will lose any remaining balance in the account at the end of the plan year.

A ver important thing to remember… the rules exist 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.

 

What if the tax laws change?

Tax advantages currently available are based on the law as it stands today. If a change in the law takes place, you will be notified.

 

Will pretaxing have an impact on Social Security benefits?

Any reduction in your taxable pay may also lead to a reduction in your Social Security benefits; however, for most employees, the reduction

in Social Security benefits is insignificant compared to the value of paying lower taxes today.

 

Will I be able to change my election?

Cafeteria plan regulations have a process for determining if a participant is allowed to make a change in election during the plan year. The two-step process is:

  1. A change in status must have occurred. A change in status has occurred if the event falls into one of the categories below:
    • – Legal marital status
    • – Number of dependents
    • – Employment status
    • – Dependent satisfies (or ceases to satisfy) eligibility requirements
    • – Change of residence
  2. The participant’s election change must be consistent with the status change event. In order to be consistent, a requested change must be on account of and correspond with a change in status that affects eligibility for coverage under an employer-sponsored plan.

 

MODIFICATION TO HEALTH FSA “USE IT OR LOSE IT” RULE

  • – FSA plan participants should note that up to $500 of any unused funds from the current plan year will be rolled over into your FSA balance for the new plan year.
  • – The rollover modification applies to Health FSA plans only (and not to other types of FSA plans such as dependent care).
  • – The rollover does not affect the maximum contribution amount for the new plan year. In other words, even if you roll over the entire $500 from the previous plan year, you may still elect up to the maximum contribution limit allowed under your employer’s plan.

 

DEPENDENT CARE FLEXIBLE SPENDING ACCOUNT

 

A plan that enhances your benefits

If you’re one of the many people who spends money on the care of dependents, a dependent care flexible spending account can make these expenses more affordable. This valuable option is available through your employer’s flexible benefits plan and is a qualified benefit under Code Section 125 of the IRS. Code Section 125 was created by the United States Congress to make benefits more affordable for you.

How it works

If you participate, you will elect to have a specified amount of pre-taxed money deducted from your paycheck each pay period. These dollars are set aside in a flexible spending account and subtracted from your gross earnings before any taxes are taken out. After you submit a receipt for a qualifying dependent care expense, you will be reimbursed from this account.

 

DEPENDENT CARE FSA

  • – Elect pre-tax dollars to pay for eligible dependent day care services
  • Use-it-or-Lose-it Rule (no Carryover option)
  • Money In, Money Out: Dependent Care funds are only available as they are contributed to the Plan via payroll.
  • – Dependent Qualifications:
    • – Individual that regularly spends at least 8 hours a day in your home
    • – Dependent care for children under age 13
    • – Dependent who is physically or mentally incapable of self-care
    • – Your daycare provider must claim your payments as income and pay tax.
    • – Review Dependent Care Qualifications Flyer for complete details.

 

DEPENDENT CARE FSA: ELIGIBLE EXPENSES

Eligible Expenses:

  • – Daycare expenses
  • – Before and after school
  • – Nanny school
  • – Nursery school
  • – Registration fees
  • – Elder care/Nursing home

Ineligible Expenses:

  • – Tuition
  • – Transportation
  • – Activity fees/supplies
  • – Field trips
  • – Overnight camp

 

Tax credits vs. dependent care FSA’s

If you participate in the plan, you cannot claim credits on your income tax return for the same expenses. Also, amounts reimbursed under this plan will reduce the amount of other dependent care expenses that you can claim for purposes of tax credits. Before you sign up, evaluate whether or not taking federal income tax credit will save you more money than a dependent care FSA.

 

The “Use It or Lose It” Rule

If you contribute dollars to a flexible spending account and do not use all the money you deposit, you will lose any remaining balance in the account at the end of the plan year.

A ver important thing to remember… the rules exist 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.

 

Understand your choices

With this program, you have benefit choices and opportunities you’ve never had before, and it’s important to understand everything completely. Reading this booklet is the first step. The next step is to attend a planning session. At the session, your representative will answer questions and estimate your tax savings, based on the amount you plan to contribute.

 

How much can I contribute?

The U.S. Congress has set these maximum allowable contributions for a dependent care flexible spending account:

  • – $5,000 for a married couple filing jointly
  • – $5,000 for a single parent
  • – $2,500 for a married person filing separately