The Flex Plan increases your take-home pay because you pay less in taxes
Tax Savings Illustrations
|Medical, dental & vision expenses||$100.00|
|Day Care expenses while you work||$400.00|
|Federal Income Tax Savings*||$75.00|
|Social Security/Medicare Tax Savings*||$38.00|
|State/Local Income Tax Savings*||$20.00|
|Saving you $133 each month!||$133.00|
*Tax Savings estimated based upon the 15% Tax Bracket, Social Security at 7.65% and State and Local taxes at 4%. Actual Tax Savings will vary by individual and location.
Medical Flex Spending Account
What expenses are eligible?
The Med-FSA covers most medical, dental and vision expenses and you can include the expenses of your qualified dependents, even if they are not covered under your group insurance plan. Eligible expenses for the Med-FSA are services, supplies and treatments that are medically necessary and prevent or treat illness or disease.
Dependent Care Assistance Plan
What is eligible day care?
Expenses that are for the care of your “qualified dependent” while you (and your spouse, if married) are gainfully employed. This includes preschool, sitters, day care centers, elder care and day camps. If your care provider works in your home, you are required to withhold taxes. If a day care center cares for more than six persons (other than persons who live there), the center must comply with state and local regulations.
Who are “qualified dependents”?
A child under the age of 13 or any age if permanently and totally disabled. For divorced or separated parents, the child is treated as a qualifying person only for the custodial parent. For more information on the requirements for a qualified dependent, please refer to IRS Publications 501 and 503.
What expenses are not eligible?
Day Care expenses while you (or your spouse) are not working due to a leave of absence, vacation, after work hours, etc. are not eligible. Overnight camp, educational expenses, kindergarten, and expenses such as field trips, food, and clothing are also not eligible. Day care expenses are not eligible if paid to anyone you claim as a tax dependent or your child under age 19, even if they are not your tax dependent.
What are the contribution limits?
The limit is $5,000 if you are single or head of household. Married couples that file a joint tax return are limited to $5,000, and married couples that file taxes separately are limited to $2,500. Your DCAP contributions cannot be greater than your taxable income or that of your spouse, if married. Other requirements and limits apply if your spouse is a full-time student or disabled and unable to care for the children.
Do I report my Day Care?
The IRS requires that you complete either Form 2441 with your annual tax return to report your DCAP Participation. Your Employer will report your DCAP contributions on your W-2 as an information item.
DCAP & the Tax Credit
Most families earning more than $40,000 will find greater tax savings in the DCAP than with the Tax Credit. The Day Care Tax Credit expense limit is $3,000 for one dependent or $6,000 for two or more dependents. If you have two dependents in day care and pay $6,000 or more per year, you can participate in the DCAP for $5,000 and take the Tax Credit on the “extra” $1,000 of day care expenses.
Premium Only Plan
How does the POP work?
Easy! When you enroll in the Premium Only Plan (POP), your employer deducts your premiums from your pay, tax-free. If your insurance premium costs change during the year, your contributions will change automatically. If the costs increase, you may change to another, less expensive plan if available from your employer but you cannot drop coverage during the plan year.
How do I get reimbursed?
You make a claim and send it with documentation of your expenses. Documentation can be copies of Explanation of Benefits (EOB) forms or detailed bills from your care provider that include the name of the provider, the dates of the services, the nature of the services and the name of the person who received the services. Check copies, “payments on account”, and “prior balance” bills are not sufficient. You can only be reimbursed for expenses you owe and will not be paid by your insurance or any other benefit plan. Keep copies of your claims for your personal records.
Who are my Qualified Dependents?
There are several tests for a dependent to be considered a qualified dependent, including relationship, age, support and residence. For information, refer to IRS Publication 501 or review the Dependent Definition flier.
When are my expenses eligible?
Expenses must be incurred in the Plan Year during your “period of coverage” (while you are an eligible, active participant) in the benefits you have elected. An expense is “incurred” when you receive the service, not when you pay the bill.
Can I change my elections?
The IRS requires that your elections be enforced for the year unless you have a “Change In Status” situation, such as marriage, divorce, death, employment changes, birth and adoption. The election change must directly relate to the event and you request the change within 30 days of the Change In Status event.
Are there other requirements?
It is important that you carefully estimate the expenses that you and your family will incur during the Plan Year. If you do not use your funds, any balance left in your accounts will be forfeited. In addition, the amounts you contribute to a benefit can only be used for that benefit. For example, you cannot use your Medical Flex Account funds to pay for Day Care Expenses.
For specific information about your Flex Plan such as the eligibility requirements, the plan entry date, the claims filing deadlines and other important information, please refer to your Summary Plan Description.