Your time is worth money. Now you can save both.

Transcription

1 Your time is worth money. Now you can save both. Aetna Health Care and Dependent Care Flexible Spending Accounts (FSAs) Use pretax dollars to pay for health care and dependent care expenses (12/06)

2 Plan to save it s easy! Flexible spending accounts (FSAs) let you put aside pretax salary dollars to help pay for health care and dependent care expenses. You can better manage your expenses and you get real tax savings. Health Care Spending Account Your health benefits plan offers you and your family protection against the high cost of health care. But, you still have out-of-pocket expenses. You may also have other health care expenses that are not covered under any benefit plan. Use the Health Care Spending Account to pay for these out-of-pocket expenses and help lessen the impact of rising health care costs. Dependent Care Spending Account You may have dependent children who need day care so you can work. Or, maybe you have an elderly parent or other dependent who needs care living with you. Reimburse yourself from this FSA for costs you pay during the year for dependent care so that you and your spouse can work outside the home. Dependent care expenses that are not work related, such as the cost of a Saturday night baby-sitter, cannot be reimbursed. Money set aside in a Dependent Care Spending Account can be used to reimburse only those dependent care expenses necessary because you (or if married, you and your spouse) work. Eligible expenses must be for the custodial care of a Qualifying Person. Qualifying Persons include: n Your dependent children up to their 13th birthday. n Any dependent living with you for more than half the year and who is physically or mentally incapable of self-care. n Your spouse living with you for more than half the year and who is physically or mentally incapable of self-care. A Qualifying Person may even be someone you cannot claim as a dependent on your income tax return. Please refer to Publication 503 on the Internal Revenue Service (IRS) website at for more information. Lower your taxes Because money goes into your FSA before federal income or FICA (Social Security and Medicare) taxes are withheld, you pay less in taxes. This gives you more income to spend! In most cases, your money is also exempt from state and local taxes. Check with your tax advisor for specifics. Depending on your tax bracket and where you live, you can save up to 40 percent on eligible health care or dependent care services! Aetna is the brand name used for products and services provided by one or more of the Aetna group of subsidiary companies.

3 Eligible expenses Health Care Spending Account n Deductibles, copayments and coinsurance n Eye care Includes eye exams, eyeglasses and contact lenses for vision correction, saline solution and LASIK surgery. n Hearing exams and hearing aids n Doctors fees and routine physicals n Laboratory fees n Chiropractic treatment n Dental work and orthodontia n Drugs and medicines Includes prescriptions and over-thecounter (OTC) items. Dependent Care Spending Account n Wages paid to a baby-sitter or a companion in or outside your home Does not include care provided by someone you declare as a dependent, your under-age-19 child, your spouse or your Qualifying Person s parent. n Services of a day care center and/or nursery school The center must comply with all state and local laws. n Cost for care at facilities away from home This includes family day care or adult day care centers, as long as your Qualifying Person usually spends at least 8 hours a day in your home. n Services provided for before and after-school care must be listed separately Fees or tuition for kindergarten and higher education are not eligible. 1

4 An amount you choose is automatically deducted from your pretax pay. How an FSA works Each year, if you choose to use a Health Care or Dependent Care Spending Account, take the following steps: n Estimate expenses Review your health care and dependent care costs from recent years and consider any changes that may occur during the upcoming year that may affect your expenses or eligibility. n Determine contributions Decide on your election amount (how much of your salary you want to set aside to fund these expenses). The amount will be deducted automatically from your pay throughout the year and credited to your Health Care or Dependent Care Spending Account. n Plan carefully Keep in mind that you cannot change your designated election amount during the year unless you have an election change event (and your plan permits election changes). Funds left over in your account at the end of the year will be forfeited. They will not be returned to you or rolled over. Typical election change events* n Marriage n Divorce n Birth or adoption of a child n Beginning or termination of spouse s employment n Transition from part-time to full-time work, or vice versa n Unpaid leave of absence taken by you or your spouse n Changing a dependent care provider or having a significant increase or decrease in provider payment Getting reimbursed from your account You must incur an expense in order to be reimbursed for it from your FSA. Expenses are incurred when the service is rendered not when they are billed, charged or paid for. Only those expenses incurred during your coverage period (generally your plan year, plus a grace period if allowed by your plan) and on or after the effective date of your enrollment in your plan will be eligible for reimbursement. Claim payments will be made twice per month frequency is determined by your employer. An Explanation of Payment (EOP) will be sent with each payment. Health Care Spending Account When you submit claims to your Health Care Spending Account, you can be reimbursed up to the full amount of your annual contribution (less any prior reimbursement), regardless of the amount of money that has been deposited to your account. Contributions will continue throughout the year, and claims will continue to be paid until your annual maximum is met. Dependent Care Spending Account If you submit a claim and your account balance is less than the amount of the claim, you will be reimbursed only for the amount of money available in your account. The remainder will be reimbursed as additional payroll deductions are deposited into your FSA. This enables you to submit a claim only once and receive funding on an ongoing basis, rather than be denied payment or be forced to resubmit the claim until it can be paid in full. * Check with your company s benefits area for a full list of eligible election change events. 2

5 Track your expenses easily! Use our online tools at Deciding how much money to save Once you decide you want an FSA, the next step is deciding how much of your salary to put aside. You ll want to consider: n How much you want to reduce your take-home pay by n Whether you itemize deductions when you do your taxes n How much health care or dependent care expenses you think you ll have in a year Tax Deductions vs. Health Care Spending Account You cannot claim the same expenses for reimbursement from a Health Care Spending Account and as an itemized deduction on your federal tax return. Consider your individual circumstances to decide whether taking a tax deduction is more beneficial than using a Health Care Spending Account. Keep in mind that only medical and dental expenses that exceed 7.5 percent of your Adjusted Gross Income can be deducted on your federal income tax return. Many people do not have enough medical expenses to qualify for this deduction. Additionally, if you prefer to take the expenses as a tax deduction, you will not realize the FICA savings. Tax Credit vs. Dependent Care Spending Account The IRS allows you to claim a Child and Dependent Care Credit (CDCC) for workrelated dependent care expenses when you file your income tax return. The CDCC amount is calculated by applying a percentage to your total work-related dependent care expenses. The expenses to which this percentage is applied may not exceed $3,000 for one Qualifying Person or $6,000 for two or more. You can use a Dependent Care Spending Account and claim the CDCC you just can t claim the same expenses for both. If you plan to use both, the IRS requires that you subtract whatever amount you have directed into an FSA from the expenses you use to calculate the CDCC. If you use a Dependent Care Spending Account, you must complete IRS Form 2441 when filing your income taxes for the year. Form 2441 and instructions are available on the IRS website at How much can I put away? Health Care Spending Account Consult your employer s plan design to determine your maximum annual contribution limit. Dependent Care Spending Account For married couples, the IRS limits the annual maximum amount for reimbursement to $5,000. If you file a separate tax return from your spouse, the maximum reimbursement is $2,500 for each of you. If either you or your spouse earns less than these amounts, your maximum annual contribution would be limited to the amount of your earned income or that of your spouse, whichever is less. You cannot use this account if your spouse has no earned income for a plan year (unless he or she is a full-time student for five months during the year or disabled). For more information, contact your tax advisor. 3

6 You will be informed of the maximum annual amount you can set aside in your account during the open enrollment period each year. Health care worksheet Deductible Coinsurance Dental work This includes fillings, orthodontia and dentures. Routine health exams Charges in excess of reasonable and customary fees Routine eye exams This includes eyeglasses and contact lenses for vision correction. Hearing aids Other eligible expenses Total Estimated Out-of-Pocket Health Care Expenses 4

7 Find everything you need to know about FSAs. Go to Dependent care worksheet Wages paid to a baby-sitter or a companion in or outside your home Do not include care provided by someone you claim as a dependent, your child under age 19, your spouse or your dependent child s parent. Services of a day care center and/or nursery school The center must comply with all state and local laws. Costs for adult care at facilities away from home This includes family day care or adult day care centers, as long as your Qualifying Person spends at least 8 hours a day in your home. Other dependent day care services considered tax eligible by the IRS Total Estimated Dependent Care Expenses 5

8 Save money on health care and dependent care expenses. Enroll today! For more information, go to Information subject to change. This brochure describes Aetna s Health Care Flexible Spending Account in general terms. Features of this plan may vary based on the specific terms established by your employer. If any conflict arises between this description and the plan document or if any point is not covered, the terms of the plan document will govern in all cases. FSA plans are governed by the rules of Sections 125 of the Internal Revenue Code and will be administered in accordance with those rules. If you are unsure about whether FSA participation is appropriate for you, refer to for more information and consult a tax advisor. For more information about Aetna plans, refer to (12/06) 2006 Aetna Inc.

9 Flexible Spending Account (FSA) Health Care and Dependent Care Enrollment Employee Information Social Security Number Name (Last, First, Middle Initial) Date of Birth (MM/DD/YYYY) Date of Hire (MM/DD/YYYY) Home Telephone Number Business Telephone Number ( ) ( ) Street Address City State Zip Code Employer Information Employer Name Contribution Complete the following section to elect the type(s) of flexible spending account plan(s) you wish to participate in and designate the per pay period contribution amounts. W=Weekly; B=Biweekly; S=Semi-monthly; M=Monthly I wish to participate in the following flexible spending account plans: Contribution Per Pay Period Pay Cycle Health Care FSA $ Dependent Care FSA $ I authorize my employer to deduct the premiums selected below from my paycheck on a pretax basis: Health Insurance Premium $ Dental Insurance Premium $ Life Insurance Premium $ Authorization - Please read the following statements and then sign and date this form. I authorize the reduction of my salary on a per paycheck basis, by the amount designated above. I understand that the amounts deducted from my pay and not used for eligible health care and/or dependent care expenses incurred the same plan year will be forfeited in accordance with IRS regulations. I also understand that this authorization is irrevocable until the next election period unless I have a change in family status. Signature Date GR (12-06)