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Currently, a flexible spending account, (FSA) is available
to benefited employees to set aside money on a pre-tax basis to
pay for expenses that are not reimbursed by medical, dental, and vision plans.
Monies also can be
set aside in a separate account to pay for day care expenses. Claims
processing is administered by RPS Plan
Administrators. Once enrolled, employees can
access personal account information by logging on at www.myflexonline.com
or by calling RPS at 303-369-7886.
Since
your contributions to your FSA are not subject to federal or state income tax or
Social Security withholding, using a flexible
spending account can save you approximately 35% on the cost of medicine or medical expenses such as an office co-pay, or prescription co-pay.
For example, if you are in the 35% tax bracket, then a
$40 office visit co-pay can actually cost you around $26, if you use the medical
FSA. Why pay more?!?
IRS Guidelines also make it possible for you to use this money
for common nonprescription drugs such as aspirin, cold medicine,
allergy medicine and pain relievers (remember to kept the receipts). Some
items, such as vitamins and dietary supplements, aren't allowed. If in
doubt about an expense, consult the Treasury site www.treas.gov (type JS-695 in
the search box on the site).
Rather than paying medical or child care expenses on an
after-tax
basis, this program allows you to pay on a pre-tax basis.
Medical
expenses can be incurred from January 1, 2009 through March 15, 2010 and
submitted as a claim for the 2009 plan year up to March 31, 2010. It is important to remember that the Internal Revenue Service
requires that, if you do decide to set aside money, you must incur
reimbursable expenses before March 15th of the following plan year or before
your last day of employment, whichever occurs first.
It
is a "use it or lose it" proposition.
For
example, if you put aside $25 every month and then have $75 left at the end of
the plan year, that $75 reverts back to the Agency and cannot be distributed
to you.
The maximum amount which may be set aside for the medical
spending account is $5,000 per year. The
maximum for dependent care is $5,000 per year ($2,500 if you are married, filing
separately).
You will need to do some careful planning for the Plan Year ahead to determine how much you
want to contribute to your Flexible Spending Account(s). Remember, these
are federally
mandated plans. As regulated by law, money
remaining in your account at the end of the Plan Year will be forfeited,
so be conservative and only contribute what you know you will spend.
How do you decide what to deposit into your account? First, review your health care bills from previous years. How many of these
expenses were planned? Are physical examinations regular expenses that you can
expect to recur? What other medical expenses for you and your family do you
anticipate for the current year? The costs you expect to pay
"out-of-pocket" for deductibles and co-payments or other upcoming expenses can
really add up. Think about these expenses when deciding how much to set aside
through this plan.
Health care expenses that are reimbursed through your
Flexible Spending Plan are not eligible for the medical tax deduction on your annual
income tax return.
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