Dependent Care Flexible Spending Account

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1 Dependent Care Flexible Spending Account The Value of Dependent Care Flexible Spending Accounts A Dependent Care Flexible Spending Account (FSA) helps you to save BIG on the care and supervision of your child. Whether you re a single parent or you and your spouse work or attend school full-time, providing supervised care for your dependents is essential to your livelihood. Expenses such as daycare, before and after-school care or even day camps can amount to significant costs paid directly from your pocket. Save 0% - 40% on your dependent care expenses! Because your FSA contributions are exempt from Federal income tax, Social Security taxes (FICA) and, in most cases, state income tax, you can save 0% - 40% on the child and elder care services you require every working day. While your actual savings is based on your individual tax rate, let s look at a typical scenario for a family of four at a 30% tax rate: The Johnsons both work and place their two young children in daycare each week day. For the two children, they pay $50 per week. Although their actual daycare costs are much higher, they take advantage of a Dependent Care FSA account and contribute the maximum amount of $5,000. Given their 30% tax rate, the Johnson s FSA contributions create a savings of $,500 per year. That s like getting six free weeks of daycare every year! With the cost of living rising every day, think about the impact that kind of savings can have on your household budget. It s All Yours There is no cost to you to have and use a Dependent Care Flexible Spending Account... no setup fees, no premiums or membership fees, no hidden fees. Save 0% to 40% on your dependent care expenses Fund your account with simple paycheck deductions Receive reimbursement for expenses through simple claims filing Reduce your income taxes

2 Plan Your Contributions The key to getting the most from your ADP Dependent Care FSA is to maximize your contributions based on anticipated eligible expenses. To plan your contributions, follow these simple steps. Review the list of eligible expenses on the FSA website. Review your child or elder care expenses from last year. Write down any anticipated changes to your dependent care needs during the benefit year (changes in provider cost, placing a new child in daycare, requiring daycare for an elder dependent.) Estimate your cost for each dependent care item. The total of your individual estimates is what you should contribute to your Dependent Care FSA. Remember, the more you need to spend on eligible expenses, the greater the value and savings you will gain from your Dependent Care FSA. It is also important to remember that an FSA is not a savings account. You must use all of your contributions each year or risk losing any unused balance at the end of the benefit plan year. If needed, contribution planning assistance can be located on the FSA website. Remember, you must actively re-enroll in your Dependent Care FSA each benefit plan year. Eligible Expenses Because your Dependent Care FSA is funded before any taxes are taken from your salary, the Internal Revenue Service determines which expenses are eligible for reimbursement. If you are uncertain about whether or not an expense qualifies for reimbursement, you should verify its eligibility before incurring the expense. A comprehensive list of IRS-approved expenses can be located on the FSA website. Some of the eligible expenses include: Care at licensed nursery schools or child centers Care provided in or outside your home during your working hours Before and after-school care Day camps Eldercare Note: $5,000 is the annual regulatory maximum per household for Dependent Care FSA contributions. Your employer determines the minimum amount you may contribute to the Dependent Care FSA. Your employer s plan documents may also define the types of expenses covered under the plan. Be sure to review your employer s plan documents before enrolling in the plan. Opening Your Account It s as simple as --3 to begin contributing to your new Dependent Care FSA: 3 Plan your contributions. Use the Spending Accounts Learn More link on the FSA website for contribution planning assistance. Enroll in the Dependent Care FSA during your annual enrollment or new hire election period. Review your account through the FSA website soon after the plan year begins and at least monthly thereafter. Your payroll contributions to your new FSA account will begin with the new benefit year or according to your employer s plan documentation. Learn more about Flexible Spending Accounts at Automatic Data Processing, Inc. 575 Westside Parkway, Suite 500 Alpharetta, Georgia ADP, Inc. The ADP Logo is a registered trademark of ADP, Inc. Printed in U.S.A.

3 Sample Eligible Expenses for Dependent Care Flexible Spending Accounts After school care (Dependent Care: Care) For custodial care for a dependent child under 3 years of age. Exceptions may be allowed if incapable of self-care. The care must be provided in order to allow the parent(s) or legal guardian(s) to work or seek employment. Agency fee (Dependent Care: Fee) Application fee (Dependent Care: Fee) Au pair (Dependent Care: Care) Amounts paid to care for a qualifying individual. Babysitter (Dependent Care: Care) Will qualify for care of eligible individual UNLESS babysitter is under 9 and the employee's child, stepchild or foster child, a tax dependent of the employee or the spouse of an employee or a parent of the child. Before school care (Dependent Care: Care) For custodial care for a dependent child under 3 years of age. Exceptions may be allowed if incapable of self-care. The care must be provided in order to allow the parent(s) or legal guardian(s) to work or seek employment. Day camp (Dependent Care: Care) Generally eligible for a dependent child under 3 years of age even if day camp specializes in specific activity such as basketball or computers. Exceptions may be allowed if documentation verifies that a dependent is incapable of selfcare. Dependent care center (Dependent Care: Care) For a dependent child under 3 years of age as long as establishment complies with state and or local licensing requirements. Exceptions may be allowed if documentation verifies that a dependent is incapable of selfcare. Deposit (Dependent Care: Fee) Elder care (Dependent Care: Care) If expenses not attributable to medical care. Individual is a tax dependent of the employee and spends at least 8 hours a day in the employee's household. Nanny (Dependent Care: Care) Amounts paid to care for a qualifying individual. Preschool (nursery school) (Dependent Care : Care) Generally eligible even if school furnishes other services such as meals or education. Registration fee (Dependent Care: Fee) Sick-child facility (Dependent Care: Care) For a dependent child under 3 years of age where the child is sick and primary purpose is child care. Exceptions may be allowed if incapable of self-care. Transportation expenses (Dependent Care: Travel) If for transporting a qualifying individual to or from place where care provided and transportation is provided by a dependent care provider. For an updated list of eligible expenses, please visit the ADP website below: The above list represents expenses that are frequently submitted for reimbursement under a Dependent Care FSA and are generally considered eligible under the Dependent Care FSA. This list is not intended to be exhaustive and is intended only to be used as a general guide. Consequently, expenses contained in this generally eligible list may be denied if the supporting claims documentation is insufficient or shows that the expense was incurred for services not considered dependent care, such as educational expenses. Payment of claims will be based on the rules set out in the applicable regulations, your employer s plan design and on the information in the required substantiation documentation.

4 Contribution Planning Worksheet Flexible Spending Account Decide How Much to Contribute The key to getting the most from your Flexible Spending Account (FSA) is to maximize your contributions based on your anticipated eligible expenses. Follow the simple steps below to estimate your out-of-pocket expenses for the coming benefit plan year. The more you contribute, the more you can save! However, keep in mind that a Flexible Spending Account is not a savings account. You must use all of your contributions each year or risk losing any unused balance at the end of the benefit plan year. Choose your tax rate Plan your expenses List your expenses Do the math Represents the total of all Federal and state payroll and income taxes. The example below uses 34 percent. Refer to the eligible expense list on the website when building your own personal expense list. List your anticipated expenses below and enter the expected total annual cost for each expense. You may view a list of eligible expenses on our website at Then do the simple calculations shown in the example below for each expense and total your projected savings and reduced cost when using an FSA. Cost Your Tax Rate Savings (Cost * Tax Rate) Cost using FSA Example: After School Care $ X 0.34 = $ $ Totals: The tax-exempt status for FSA contributions is the mechanism that allows you to save money on your essential child care and elder care purchases. 007 Automatic Data Processing, Inc.

5 What is Online Forms Completion & Submission? Online Forms Completion & Submission is the fastest, easiest and most secure way to complete and submit all of your plan-related forms. The Online Forms Completion & Submission tool: Eliminates the need to complete forms by hand Automatically enters all your personal data (name, address, employer and FlexID) Provides unlimited data entry Reduces the risk of claims denials by providing eligibility warnings during data entry Allows you to submit your completed claim package (forms and receipts) with a single click Where are the Online Forms? To use the Online Forms, login to your account on the Spending Account website and select the Forms or File A Claim quick link. How do I enter Online Forms data? Each form type has a simple fill-in format with step-by-step instructions. You just:. Fill in the required information fields.. Click Save. Participant Name Forms are here How do I attach receipts to Claims? Once you have entered all the data for your form:. Select Attach under the receipt section. Select the image file you want to attach and choose Open How do I submit my Online Forms? Now that you have completed your form:. Verify the data you entered for accuracy.. Verify receipt upload (if applicable) 3. Select Download to save your copy 4. Select Submit to submit your form to ADP 4 3 What types of forms are available for Online Forms Completion & Submission? Online forms are available for all of the forms related to the Spending Account plans in which you are enrolled. If you currently have access to a paper-based form, you can find this same form, ready for online completion and submission, through the Forms page on the ADP Spending Account website.