human resources, compensation and benefits 2009 open enrollment flexible spending accounts more...
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Human Resources, Compensation and Benefits
2009 Open Enrollment
Flexible Spending AccountsMore Take-Home Pay Through Tax Savings
The University of Arizona – Human ResourcesThe University of Arizona – Human Resources 22November 2008November 2008
AGENDA
A Flexible Spending Account overview
How it works
Health Care reimbursement account
Dependent Care reimbursement account
Important planning information
Submitting claims for reimbursement
2009 Open Enrollment information
Resources
The University of Arizona – Human ResourcesThe University of Arizona – Human Resources 33November 2008November 2008
FLEXIBLE SPENDING ACCOUNT OVERVIEW
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 ResourcesThe University of Arizona – Human Resources 44November 2008November 2008
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 ResourcesThe University of Arizona – Human Resources 55November 2008November 2008
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 2009
File claims and receive reimbursement
The University of Arizona – Human ResourcesThe University of Arizona – Human Resources 66November 2008November 2008
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 Expenseswww.irs.gov/pub/irs-pdf/p502.pdf
The University of Arizona – Human ResourcesThe University of Arizona – Human Resources 77November 2008November 2008
Without FSA With FSA
Annual Salary $30,000 $30,000Office visits $ 150Prescription co-pays $ 500Dental deductibles $ 100Prescription glasses/contacts $ 600Over-the-counter medication $ 150Total out of pocket expenses $1,500Pre-tax deduction 0 1,500Taxable Income $30,000 $28,500
Federal Income Tax 1,507 1,345State Income Tax 347 309Social Security (FICA) Tax 2,286 2,162Total taxes 4,140 3,816
Net paycheck $25,860 $24,684After-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
Annual savings $324
HEALTH CARE REIMBURSEMENT ACCOUNT W. & W. WILDCAT EXPERIENCE*
The University of Arizona – Human ResourcesThe University of Arizona – Human Resources 88November 2008November 2008
Without FSA With FSA
Annual Salary $60,000 $60,000Office visits $ 150Prescription co-pays $ 500Dental deductibles $ 100Prescription glasses/contacts $ 600Over-the-counter medication $ 150Total out of pocket expenses $1,500Pre-tax deduction 0 1,500Taxable Income $60,000 $58,500
Federal Income Tax 5,976 5,734State Income Tax 1,375 1,319Social Security (FICA) Tax 4,572 4,448Total taxes 11,923 11,501
Net paycheck $48,077 $46,999After-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
Annual savings $422
HEALTH CARE REIMBURSEMENT ACCOUNT W. & W. WILDCAT EXPERIENCE*
The University of Arizona – Human ResourcesThe University of Arizona – Human Resources 99November 2008November 2008
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, Sick Child Program and Emergency/Back-Up Care Program participants– Employee out of pocket expenses and University contributions
for these three pre-tax programs are included in the $5,000 annual maximum
– Consult your professional tax advisor– Contact UA Life & Work Connections, at 621-4365 or visit
http://lifework.arizona.edu/cc/
The University of Arizona – Human ResourcesThe University of Arizona – Human Resources 1010November 2008November 2008
DEPENDENT CARE REIMBURSEMENT ACCOUNT SAMPLE EXPENSES
Child care Nanny service Nursery school 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 Expenseswww.irs.gov/pub/irs-pdf/p503.pdf
The University of Arizona – Human ResourcesThe University of Arizona – Human Resources 1111November 2008November 2008
DEPENDENT CARE REIMBURSEMENT ACCOUNT W. & W. WILDCAT EXPERIENCE*
Without FSA With FSAAnnual Salary $30,000 $30,000Total dependent care expense $5,000Pre-tax deduction 0 5,000Taxable Income $30,000 $25,000
Federal Income Tax 1,507 966State Income Tax 347 222Social Security (FICA) Tax 2,286 1,872Total taxes 4,140 3,060
Net paycheck$25,860 $21,940After 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
Annual savings $1,080
The University of Arizona – Human ResourcesThe University of Arizona – Human Resources 1212November 2008November 2008
DEPENDENT CARE REIMBURSEMENT ACCOUNT W. & W. WILDCAT EXPERIENCE*
Without FSA With FSAAnnual Salary $60,000 $60,000Total dependent care expense $5,000Pre-tax deduction 0 5,000Taxable Income $60,000 $55,000
Federal Income Tax 5,976 5,165State Income Tax 1,375 1,188Social Security (FICA) Tax 4,572 4,158Total taxes 11,923 10,511
Net paycheck$48,077 $44,489After 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
Annual savings $1,412
The University of Arizona – Human ResourcesThe University of Arizona – Human Resources 1313November 2008November 2008
IMPORTANT PLANNING INFORMATION
Use care when estimating expenses Be conservative Review, consider current year
expenses Do you anticipate similar expenses for
2009? Use the worksheet Track expenses in 2009 for enrollment
in 2010
The University of Arizona – Human ResourcesThe University of Arizona – Human Resources 1414November 2008November 2008
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 ResourcesThe University of Arizona – Human Resources 1515November 2008November 2008
2009 OPEN ENROLLMENT
November 1 – 30, 2008 Effective January 1, 2009 through
December 31, 2009 Enroll using Employee Link
http://emplink.arizona.edu Current participants must re-enroll to
ensure participation in 2009
The University of Arizona – Human ResourcesThe University of Arizona – Human Resources 1616November 2008November 2008
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