Human Resources, Compensation and Benefits 2010 Open Enrollment Flexible Spending Accounts More Take-Home Pay Through Tax Savings.

Human Resources, Compensation and Benefits

2010 Open Enrollment

Flexible Spending AccountsMore Take-Home Pay Through Tax Savings

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AGENDA

A Flexible Spending Account (FSA) overview

How it works

Health Care FSA

– Optional Debit Card

– Limited Health Care FSA

Dependent Care FSA

Important planning information

Submitting claims for reimbursement

2010 Open Enrollment information

Resources

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FLEXIBLE SPENDING ACCOUNT OVERVIEW

Employer-sponsored plan

Estimate annual out-of-pocket medical and

dependent care expenses

Pre-tax payroll deductions deposited into the

Flexible Spending Account

Use these dollars for reimbursement of qualified

out-of-pocket expenses

Pay less taxes

Increase your take-home pay

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HEALTH CARE FSA OVERVIEW

Reimbursement for qualified expenses

Qualified expenses defined by the IRS – IRS Pub. 502 www.irs.gov/pub/irs-pdf/p502.pdf

Includes: Medical, dental, prescription, vision, hearing, and over-the-counter medications (under certain circumstances)

No minimum contribution per paycheck

$5,000 maximum annual contribution

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HEALTH CARE FSA SAMPLE EXPENSES

Office visit co-pay Health care deductible Prescription co-pay Orthodontia expenses Prescription eyeglass

and contact lenses Acupuncture Blood pressure monitor Hearing aids

Over-the-counter medications (purchased to treat an existing or imminent medical condition)– Allergy, cold, cough, flu,

nasal, sinus– Diabetic supplies– Denture adhesive– Sleeping aids– Pain relievers, aspirin and

non-aspirin

Employees enrolled in the Health Savings Account Option eligible for reimbursement of expenses related to dental, vision, preventative care only (Limited Health Care FSA)

A complete listing can be found on ASI’s website at www.asiflex.com

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LIMITED HEALTH CARE FSA

Reimbursement for dental, vision and preventative care expenses only– Dental Care: Cleanings, Fillings, Crowns,

Orthodontics, Denture Care Products– Vision Care: Contact lenses, Eyeglasses, LASIK,

Contact Lens Solution– Preventative: Out-of-Network Co-pays and

Prescriptions

You must be enrolled in the Health Savings Account Option to be eligible for the Limited Health Care FSA

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Without FSA With FSAAnnual Salary $30,000 $30,000Office visits $ 150Prescription co-pays $ 500Dental deductibles $ 100Prescription glasses/contacts $ 600Over-the-counter medication $ 150Total out of pocket expenses $1,500Pre-tax deduction 0 1,500Taxable Income $30,000 $28,500

Federal Income Tax 1,507 1,345State Income Tax 347 309Social Security (FICA) Tax 2,286 2,162Total taxes 4,140 3,816

Net paycheck $25,860 $24,684After-tax expenses 1,500 0

Actual take-home pay $24,360 $24,684

*Sample uses married with two exemptions; savings varies depending on employee’s tax situation

Visit http://asiflex.com/Calculator/Tax-Savings-Calculator.htm to determine your tax savings

Annual savings $324

HEALTH CARE FSA W. & W. WILDCAT EXPERIENCE*

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Without FSA With FSAAnnual Salary $60,000 $60,000Office visits $ 150Prescription co-pays $ 500Dental deductibles $ 100Prescription glasses/contacts $ 600Over-the-counter medication $ 150Total out of pocket expenses $1,500Pre-tax deduction 0 1,500Taxable Income $60,000 $58,500

Federal Income Tax 5,976 5,734State Income Tax 1,375 1,319Social Security (FICA) Tax 4,572 4,448Total taxes 11,923 11,501

Net paycheck $48,077 $46,999After-tax expenses 1,500 0 Actual take-home pay $46,577 $46,999

Visit http://asiflex.com/Calculator/Tax-Savings-Calculator.htm to determine your tax savings*Sample uses married with two exemptions; savings varies depending on employee’s tax situation

Annual savings $422

HEALTH CARE FSA W. & W. WILDCAT EXPERIENCE*

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HEALTH CARE FSA OPTIONAL DEBIT CARD

NEW: Optional debit card to pay for eligible health care expenses

For Health Care FSA only – not available with Limited Health Care FSA

Can only be used at:– Health care providers based upon the Merchant

Category Code

– Retail merchants using an Inventory Information Approval System

• Wal-Mart, Target, Costco, Safeway, Walgreens, CVS

• Complete list at www.asiflex.com/debitcards

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HEALTH CARE FSA OPTIONAL DEBIT CARD

The debit card reduces but does not eliminate paperwork

Every transaction must be substantiated Some substantiation can be done

electronically All other purchases will require follow-up

documentation requested by ASI Always keep your documentation

even if ASI does not ask for it

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HEALTH CARE FSA OPTIONAL DEBIT CARD

Purchases are electronically substantiated when they:− Match a co-payment− Match any combination of co-payments up to 5

times the highest amount for the type of expense based on the member’s health plan

− Occur at a store with the Inventory Information Approval System

− Are recurring expenses and are substantiated once via paper claim

All other purchases require follow-up documentation

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HEALTH CARE FSA OPTIONAL DEBIT CARD

How to obtain a debit card: An application for the debit card will be mailed

to your home address

Cost: $1/month – Entire annual fee will be deducted from

your healthcare reimbursement account election at the time you elect the card

Return application to ASI

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DEPENDENT CARE FSA OVERVIEW

Reimbursement for qualified dependent care expenses that are– necessary to allow you to work or look for work– necessary to allow your spouse to work, look for

work, or be a full-time student

Child care and adult daily care expenses, not dependent medical expenses

$5000 maximum contribution

Must provide over half of support for dependent

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DEPENDENT CARE FSA SAMPLE EXPENSES

Care for child under age 13– Child care– Nanny service– Preschool – Must have custody more than 50 percent of the year

Care for a “qualifying relative” age 13 and over– Unable to care for self, shares residence, income less

than Federal exemption amount

Expenses may be paid to a relative (child, parent or grandparent of participant) IF– caregiver is not under age 19– caregiver is not a tax dependent of the participant

IRS Publication 503: Child and Dependent Care Expenseswww.irs.gov/pub/irs-pdf/p503.pdf

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DEPENDENT CARE FSA CONSIDERATIONS

Special considerations for UA Child Care Voucher Program, Sick Child Program and Emergency/Back-Up Care Program participants

– Employee out of pocket expenses and University contributions for these three pre-tax programs are included in the $5,000 annual maximum

– Consult your professional tax advisor– Contact UA Life & Work Connections, at 621-4365

or visit http://lifework.arizona.edu/cc/

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DEPENDENT CARE FSA W. & W. WILDCAT EXPERIENCE*

Without FSA With FSAAnnual Salary $30,000 $30,000Total dependent care expense $5,000Pre-tax deduction 0 5,000Taxable Income $30,000 $25,000

Federal Income Tax 1,507 966State Income Tax 347 222Social Security (FICA) Tax 2,286 1,872Total taxes 4,140 3,060

Net paycheck $25,860 $21,940After tax expenses 5,000 0

Actual take-home pay $20,860 $21,940

Sample uses married with two exemptions; savings varies depending on employee’s tax situationVisit http://asiflex.com/Calculator/Tax-Savings-Calculator.htm to determine your tax savings

Annual savings $1,080

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DEPENDENT CARE REIMBURSEMENT ACCOUNT W. & W. WILDCAT EXPERIENCE* Without FSA With FSA

Annual Salary $60,000 $60,000Total dependent care expense $5,000Pre-tax deduction 0 5,000Taxable Income $60,000 $55,000

Federal Income Tax 5,976 5,165State Income Tax 1,375 1,188Social Security (FICA) Tax 4,572 4,158Total taxes 11,923 10,511

Net paycheck $48,077 $44,489After tax expenses 5,000 0

Actual take-home pay $43,077 $44,489

Sample uses married with two exemptions; savings varies depending on employee’s tax situationVisit http://asiflex.com/Calculator/Tax-Savings-Calculator.htm to determine your tax savings

Annual savings $1,412

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FSA PROCESS

Estimate annual out-of-pocket expenses

Incur eligible out-of-pocket expenses in 2010

Submit a claim to ASI by mail, fax or email– claim forms available at www.ASIFlex.com– use EmplID

Reimbursement by: – check mailed to your home – direct deposit to a checking or savings

account You can receive e-mail letting you know when

a reimbursement has come through Submit claims through April 30, 2011

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IMPORTANT PLANNING INFORMATION

Use care when estimating expenses– Consider debit card cost (optional)

Be conservative Review, consider current year

expenses Do you anticipate similar expenses for

2010? Use the worksheet Track expenses in 2010 for enrollment

in 2011

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WHO IS ASI?

Third party administrator– Answers questions about this plan– Receives, reviews and approves

claims• Submit claims with your EmplID

– Sends reimbursement directly to you through

• Direct deposit• Check mailed to your home address

(800) 659-3035 www.asiflex.com

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2010 OPEN ENROLLMENT

November 2 – 30, 2009 Effective January 1, 2010 through

December 31, 2010 Enroll using UAccess Employee

http://uaccess.arizona.edu Current participants must re-enroll to

ensure participation in 2010

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RESOURCES …

HR website (plan information) – www.hr.arizona.edu

UAccess (to enroll) – http://uaccess.arizona.edu

ASI (claims information)– www.asiflex.com

IRS Pub. 502 (medical/dental care) – www.irs.gov/pub/irs-pdf/p502.pdf

IRS Pub. 503 (dependent care)– www.irs.gov/pub/irs-pdf/p503.pdf