LOGICAL DEDUCTIONS, LLC

167 Cherry St. Suite 159 Milford, CT 06460 Keith Weindling 203-268-9295 1

Flexible Spending :

Health Care Dependent Care Transit Benefits

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FLEXIBLE BENEFIT EXAMPLES

• Medical Co-Pays • Prescription Co-Pays Dental Co-Pays • Eye Glasses • Contact Lenses • Chiropractor • Dependent Care • Day Care Expense • Transit Expense (Train) • Parking Expense • Hearing Aid • Counseling 3

What is a Flexible Spending Account?

A Flexible Spending Account is an easy way for participants to pay for health care, dependent care, and transit expenses that are not covered by another benefits plan through payroll deductions on a pre-tax basis. The program is governed by the IRS.

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Why Offer Flexible Spending Accounts?

• Saves participants and clients money – FSA deposits are made on a pre-tax basis – EMPLOYERS save on matching FICA contributions and offer an excellent fringe benefit to all employees. – PARTICIPANTS save on Federal, State, and local income taxes, as well as FICA Taxes.

– Encourages participants to make appropriate health care spending decisions 5

FSA Tax Savings Example

With FSAs Gross Salary

$35,000

Health, Dependent, and Transit Expenses

Paid Through the FSAs

$ 5,000

Taxable Salary Taxes (30%) Health, Dependent, and Transit Expenses

Not Paid Though the FSAs

-0-

Take-home Pay

$30,000 $ 9,000 $21,000

Employee Savings $1,500 Without FSAs

$35,000 -0 $35,000 $10,500 $ 5,000 $19,500 6

FSA Tax Savings Example

With FSAs Gross Salary

$35,000

Health, Dependent Care, and Transit Expenses

Paid Through the FSAs

$ 5,000

Taxable Salary Taxes (30%) Health and Dependent Care Expenses

Not Paid Though the FSAs

-0-

Take-home Pay

$30,000 $ 9,000 $21,000

Employer Savings Without FSAs

$35,000

$382.50 per employee

-0 $35,000 $10,500 $ 5,000 $19,500 7

Health Care Reimbursable Expenses • Medical, dental and other expenses not covered by participant’s health plan • Deductibles and co-payments, if applicable for participant’s plan or participant’s spouse’s plan • Vision expenses (contact lenses,

lasik surgery

, eyeglasses, eye exams, etc.) • Hearing expenses (hearing exams, aids) Psychotherapy, counseling 8

Dependent Care Reimbursable Expenses • Licensed nursery schools, day camps, day care centers • Services from individuals who provide care inside or outside participant’s home (care provider may not be participant’s dependent or a child age 13 or younger).

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Transit and Parking Expenses • Qualified transportation expenses generally include payments for the use of mass transportation (train, subway, bus fares are typical examples).

• Parking expenses include the costs of parking a vehicle in a facility that is near the employee’s place of work or parking at a location from where the employee commutes to work. (for example, the cost of parking in a lot at the train station so that the employee can continue their commute on the train) 10

FSA Contribution Amounts

Health Care FSA

• Plan Maximum is set by employer

Dependent Care FSA

• Plan Maximum is $5000 • Transit Expense Guidelines • Parking: Transit: 11

IRS Limitations  Use it or lose it (national forfeiture rate is only 5%)  Uniform coverage  Limited opportunity to revoke or make new elections 12

Family Status Changes  marriage or divorce  birth or adoption of a child  death of a dependent or spouse  loss of a dependent child’s eligibility  commencement or termination of your spouse’s employment  change in employment status (from full-time to part-time or vice versa)  unpaid leave of absence taken by you or your spouse 13

FSA Plan Fees

• One Time Plan Setup: • Annual Renewal : $ 350.00

$ N/C • Monthly : $ 35.00 Base $ 3.50 per participant • All checks sent directly to each employee. Reimbursements may be submitted 14 monthly.

Employer Savings Example:

# of Employees: Health Care Contribution : Dependent Care Contribution : Total Employee Contributions: Annual Employer Savings (FICA 7.65% x total contributions): Estimated Annual Fees:

TOTAL EMPLOYER SAVINGS:

____10____ ___$6,000___ ___$10,000__ ___$16,000__ ___$1,224___ ____$840____

___$384___ Flexible Savings Plans are an excellent benefit to all employees !!

In this example, each employee is also saving over $450 ($1600 in pre-tax contributions times FICA + FIT +SIT )

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