Section 125 Flexible Spending Accounts FSAs

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Section 125 Flexible Spending Accounts (FSAs)

• Educators Benefit Consultants, LLC
• A division of Educators Financial Services, Inc.

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Section 125Flexible Spending Accounts (FSA)

• FSAs allow you to pay for eligible medical and
  dependent care expenses through pre-tax payroll
  deductions.
• Eligible expenses may be incurred by you, your
  spouse and dependents

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Your Flex Program

• The Big 3
• Three categories you can elect to flex for.
• Medical FSA
• Pays for expenses not paid for by your health
  insurance
• Outside Health Insurance FSA
• Individually purchased policies
• Dependent Care FSA

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Tax Savings Table
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Medical FSA

• Pre-tax dollars may be used to pay for
  un-reimbursed
• medical expenses not covered by insurance, such
  as
• Medical/Dental plan deductibles and co-pays
• Eye Exams, Contact Lenses and Eyeglasses
• Hearing Care
• Prescription Drugs
• Orthodontia
• Prescribed Smoking Cessation Programs
• Prescribed Weight Loss Programs
• Over-the-Counter Medicines

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Outside Health Dental Insurance Premiums

• Policies purchased by individuals with after-tax
  dollars
• Payroll premiums are not eligible expenses
• Supplemental policies including AFLAC, dental,
  vision, etc.
• Long-Term Care is not an eligible expense

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Dependent Care

• Dependent Care/Daycare expenses are only eligible
  while you are gainfully employed or while you are
  looking for employment
• Daycare or summer day camp is eligible
• overnight camp is not eligible

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Dependent Care

• Daycare for children age 12 and under
• Must be custodial parent
• Dependent care for a dependent who is physically
  or mentally incapable of caring for
  himself/herself
• IRS definition of dependent

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Flex and the Dependent Care Tax Credit--What Are
The Limits?

• Flexing Dependent Care
• 5,000 maximum per household per plan year
• Dependent Care Tax Credit
• Tax Credit max is 3,000 for 1 child
• Tax Credit max is 6,000 for 2 or more

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Flex or Dependent Care Tax CreditWhats Best For
Me?

• Maximize 1040 Tax Credit and Flex excess through
  Flex Plan if
• Filing Single and AGI is between 19,000-38,000
• Filing Married-Joint, have 1 child and AGI is
  between 33,000-41,000 or 2 children and AGI is
  between 37,000-39,000
• All others should Flex for expense and claim
  excess as Tax Credit

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Flexing Dependent Care

• You may flex up to 5,000 per year regardless of
  number of children
• If you flex and your cost exceeds the 5,000 max
  you may use the tax credit for the difference
• Cant exceed tax credit limits

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Use It or Lose It

• Employee make elections prior to the beginning of
  the plan year
• Conservatively estimate your expenses
• You will make a separate election for each
  category
• You cant move money around
• You will receive a reminder from us 90 days
  before the end of plan year to use your money up

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Elections Are Irrevocable

• Your elections are irrevocable unless you have a
  Change Event
• Marriage or Divorce
• Birth, Adoption, Death of Child
• Death of Spouse
• Change in Employees or Spouses Employment
  Status
• Change in Residence
• Change in Cost of Dependent Care
• Change in Cost/Coverage of Health Insurance Plan
• Doesnt apply to Med FSA category

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FSA Annual Limits

• Medical
• Maximum is _______
• Dependent Care
• Maximum is 5,000 if single or married filing
  jointly
• 2,500/each for married couple filing separately
• Overall maximum you may flex in plan year is
  20,000 or 100 of salary whichever is less.

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Are You Better Off?

• With an FSA qualifying expenses are paid with
  pre-tax dollars from the very first dollar
• Without an FSA your medical expenses must exceed
  7.5 of your Adjusted Gross Income (AGI) to be
  deductible

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Filing Claims

• Claims must be for services provided within the
  Plan Year.
• You have 6 months after the end of the plan year
  to file claims for services that were incurred
  during the plan year while employed.
• If you separate from service, you have 60 days
  after your termination date to file claims that
  were incurred during your employment.

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Enrolling is EASY!

• You have worksheets in your enrollment kit to
  help you estimate the total amount you should
  flex
• You can make an one-on-one benefit election
  meeting with a local financial advisor to get
  your questions answered

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Deadline!

• All Benefit Election Forms must be submitted by
  the districts deadline
• Your Plan Year begins ___________ so the deadline
  is ____________!
• After each enrollment period expires you may
  not sign up for this benefit until next years
  enrollment period!

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QUESTIONS?

• Questions regarding claims and eligible expenses
  can be directed to EBC at
• Phone [phone]
• Toll-free 1-888-507-6053
• Forms are available on-line
• www.tsainvest.com
• Click on the EBC logo