East Central College

Pre-Tax Spending Accounts

• Flexible Spending Account (FSA) – Pre-tax money for out-of-pocket medical expenses – Includes deductibles, co-pays, dental work, etc.

– Expenses can be for you, your spouse or any of your tax dependents (regardless of whose insurance the dependent is on) • Dependent Care Assistance Program (DCAP) – – Reimbursement for childcare expenses Reimbursement for qualified care of a tax dependent 2

How much can you save?

• Most people save at least 25% on each dollar they contribute

by Example: You could save at least $125 on a $500 pair of glasses using pre-tax dollars!

• Check out the

Tax Savings Calculator

at www.asiflex.com

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How do Flexible Spending Accounts work?

• First, you decide how much money you want to set aside into your Flexible Spending Account (FSA) • Make this decision during Open Enrollment or when you are first eligible to enroll • That amount (called your annual election) is deducted evenly from each paycheck over the course of the year before income and FICA taxes are assessed 4

How do you access your money?

• After you incur an eligible expense you can: • Submit claims with supporting documentation for reimbursement • Complete claims typically processed within 2 days of receipt • Use your optional FSA debit card to pay for your medical expenses • The debit card is available only for the health care FSA 5

Flexible Spending Account

Commonly Claimed Expenses

Glasses Dental Work Lab Work Medical imaging Chiropractic Care Prescriptions

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REGULATORY CHANGE

• Over-the-Counter Drugs/Meds – Eligible but only with a prescription – Effective for items purchased 1/1/2011 forward – Examples of items that will now require a prescription for reimbursement include: Acid controllers Anti-diarrhea products Baby rash ointments Digestive aids Laxatives Respiratory treatments Allergy & Sinus meds Anti-gas products Cold sore remedies Feminine anti fungal items Motion sickness Sleep aids & sedatives • For a complete list go to the ASIFlex website.

Antibiotic ointments Anti-itch products Cough, cold & flu products Pain relief Stomach ailment remedies 8

How much to set aside

• Maximum up to $3,000 per plan year per family – If your spouse works for the College, you may each set aside up to the max 9

Your funds are…

• Deducted over the course of the plan year • Available to you in full on January 1 • Available during a spending grace period: – For example: services provided January 1, 2012 – March 15, 2012 can be used to claim 2011 plan year funds. This provides extra time to spend money not yet used. (During this time you can’t use your debit card to claim expenses from the previous year so use a claim form.) 10

Easy Reimbursement

• ASIFlex can issue direct deposits to a checking or savings account • If you do not sign up for direct deposit, your reimbursements will be made via check mailed to your home address • You can receive e-mail letting you know when a reimbursement has come through • Optional debit card to pay for eligible health care expenses.

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FSA Debit Card

• • Use the debit card for out-of-pocket medical expenses only Card use is restricted to use at: – – Known health care providers Many (but not all) retail outlets; some are: – Wal-Mart – Sam’s Club – Walgreen’s – Dillon’s – Osco – Target – Fred Meyer – Costco 12

FSA Debit Card

(continued)

Doesn’t necessarily eliminate paperwork

− Every transaction must be substantiated somehow − Some substantiation can be done electronically − Remaining purchases prompt a request for documentation −

Always keep your documentation even if ASIFlex does not ask for it

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Dependent Care Assistance Program

DCAP

• Or Provides a tax break on child or other dependent care expenses incurred while: – You go to work (single parent) – You and your spouse go to work Or – You go to work and your spouse: – – – Looks for work Pursues an educational opportunity full-time Is the dependent who needs the care • Other expenses are not eligible

For example, getting a babysitter for a Friday night date

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is not an eligible expense

Eligible Dependents

• • Children under the age of 13* Older dependents unable to care for themselves – – Who live in your home at least 8 hours per day Must meet IRS income guideline

*You or your spouse must be custodial parent with over 50% custody if divorced

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Eligible Expenses

• • • • Day care services General purpose day camps Babysitters Pre-school 17

Ineligible Expenses Include

• • Cost of food and transportation if itemized Educational expenses – Includes private schools • • • Overnight camps Payments to your spouse or any other dependent Payments to your child under 19, even if he or she is not your dependent 18

Deduction Amount

Family maximum of $5,000/year This is an IRS maximum

per household

Receiving Payment • Deposit directly into your bank account • If you do not sign up for direct deposit, a paper check will be mailed to your home address • Receive notice of deposit via e-mail 19

Important Points to Remember

• • • • Regarding both FSA & DCAP Debit card is not available for DCAP expenses Employees who wish to continue in FSA & DCAP must enroll every year, even if they want to set aside the same amounts Election is generally fixed for the entire plan year Unused funds will go back to the plan administrator – – – Use it or lose it by the deadline Start small if you are unsure of how much you will actually spend Keeping track of your account is very easy 20

Resources

www.asiflex.com E-mail [email protected]

Call 1-800-659-3035

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Questions?

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