Page 11 - LADACIN 2022-23 Benefit Guide

Flexible

Annual
Eligible Expenses Contribution Benefit
Spending Limits

Health Care FSA
Most medical, dental and Saves on eligible
Accounts vision care expenses that Maximum expenses not
are not covered by your
health plan (such as covered by
contribution is
copayments, coinsurance, insurance; reduces
$2,850 per year
deductibles, eyeglasses your taxable
A Flexible Spending Account (FSA) is a program that and doctor-prescribed income
helps you pay for health care and dependent care over the counter
costs using tax free dollars. Each pay period, you medications)
decide how much money you would like to contribute
to one or both accounts. Your contribution is Dependent Care FSA Maximum
Dependent care expenses contribution is
deducted from your paycheck on a pretax basis and is
(such as day care, after $5,000 per year Reduces your
put into the Health Care FSA, the Dependent Care FSA,
school programs or elder
or both. When you incur expenses, you can access the (Differs if married taxable income
care programs) so you and
funds in your account to pay for eligible health care or your spouse can work or and filing separate
dependent care expenses. attend school full-time tax returns)

This chart shows the eligible expenses for each FSA;
how much you can contribute to each FSA each year,
and how you benefit by using an FSA. EXAMPLE
Here’s a look at how much you can save when you use an FSA to pay
IMPORTANT INFORMATION ABOUT FSAs for your health care and dependent care expenses.
Your FSA elections are effective from January 1
through December 31. Claims for reimbursement Account Type With FSA Without FSA
must be submitted by March 31 of the following year.
Please plan your contributions carefully. Any money
over $570 remaining in your account as of March 31 Your taxable income $50,000 $50,000
will be forfeited. This is known as the “use it or lose it”
rule and it is governed by Internal Revenue Service
regulations. Note that FSA elections do not Pretax contribution to Health $2,000 $0
automatically continue from year to year; you must Care and Dependent Care FSA
actively enroll each year.
Federal and Social Security taxes* $15,696 $16,350
All employees must satisfy a one year waiting period
to enroll.
After-tax dollars spent on eligible $0 $2,000
expenses

Annual enrollment occurs in Spendable income after expenses $32,304 $31,650
the Fall for a January 1 st and taxes
Effective Date Tax savings with the Medical and $654 N/A
Dependent Care FSA

*This is an example only; not your actual experience. It assumes a 25% federal income tax rate
marginal rate and a 7.7% FICA marginal rate. State and local taxes vary, and are not included in this
example. However, you will save on any state and local taxes as well.
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