10 months ago

RCA Benefit Guide

Health Savings Account

Health Savings Account (HSA) A Health Savings Account (HSA) is an individually owned tax-advantaged savings account. By contributing to an HSA, you reduce your taxable income and increase your take-home pay. You can use your account to pay for qualified health care expenses for you, your spouse and your tax dependents. The money in your HSA is yours to keep. You must be enrolled in a qualified High Deductible Health Plan (HDHP) to open an HSA. WHAT DO PEOPLE LOVE ABOUT THE HSA? • Tax savings—Contribute pre-tax dollars and reduce your taxable income • Tax-free earning—Money you keep in your HSA can earn interest tax free • Tax-free spending—Money you take from your HSA to pay for qualified health care costs is never taxed • You own your HSA—Your HSA stays with you, even if you switch employers, change health plans or retire • There’s no use-it-or-lose-it policy—Unused funds roll over from year to year • It’s an investment—Your HSA is a savings account that can earn interest. It’s a terrific way to put money away for health care costs down the road, even in retirement. After you build up a certain amount, you may have investment options CONTRIBUTION LIMITS Contribution limits are adjusted annually. For 2018 the maximum that can be contributed into an HSA is $3,450 for individual coverage and $6,900 for family coverage. The sum of all contributions for a calendar year (from all sources; i.e., yourself or your employer) must not exceed the IRS contribution limits. Individuals and spouses covered under an HDHP between the ages 55 and 65 can make “catch-up” contributions up to an additional $1,000 per year. Flexible Spending Account (FSA) A Flexible Spending Account (FSA) is an employer-sponsored benefit that allows you to use pre-tax income to pay for qualified expenses for you, your spouse, and your eligible dependents. Since your contribution is set aside before taxes are calculated, you effectively decrease your taxable income, which may allow you to actually increase your spendable income. You do not need to be enrolled in a medical plan to qualify. HEALTH CARE FLEXIBLE SPENDING ACCOUNT (HCFSA) Health care flexible spending accounts (HCFSA) allow you to pay for everyday, routine medical expenses such as copays, deductibles, prescriptions, dental services and vision care. Certain over-the-counter (OTC) products are also eligible for reimbursement such as bandages, sunscreen, thermometers and much more. OTC medications are eligible for reimbursement with a prescription from your physician. Visit for a list of OTC eligible products. Another big advantage of the HCFSA—employee contributions are available on the first day of the plan year. DEPENDENT CARE FLEXIBLE SPENDING ACCOUNT (DCFSA) A dependent care flexible spending account (DCFSA) is a pre-tax benefit account that can be used to pay for dependent care services such as preschool, summer day camp, before or after school programs, baby sitters, and child or adult daycare, so that you and your spouse can work or attend school full-time. You can use your DCFSA funds during the plan year as long as the funds are in your account. FUNDING YOUR FSA Calculate your annual reimbursable expenses. Take into consideration what your out-ofpocket expenses will be during the upcoming plan year for you and your dependents. Note: Once you make your election, you will not be able to change your deduction during the plan year. However, if you experience a qualifying life event you may be permitted to change your election. The maximum that can be deducted for the HCFSA is $2,650 per tax year. At the end of the plan year your HCFSA allows you to carry over up to $500 into the following plan year. Funds exceeding $500 at the end of the plan year are forfeited*. The maximum for DCFSA is $5,000 per tax filing ($2,500 if married and filing separate tax returns). Any unused funds that remain in your DCFSA will be forfeited* at the end of the grace period. *As a result of the “use it or lose it” rule, it is important for you to determine the actual costs you expect to incur during the course of the plan year. 10 | 2018 Recovery Centers of America Benefit Guide

HSA & FSA While an HSA and HCFSA have some pretty big differences, they also have the following in common, QUALIFIED MEDICAL EXPENSES Funds you withdraw from your HSA or HCFSA are tax-free when used to pay for qualified medical expenses as described in Section 213 (d) of the Internal Revenue Service Tax Code. A list of expenses is available at the IRS website, in IRS Publication 502, “Medical and Dental Expenses.” Below are some examples of eligible expenses. This list is not all-inclusive. • Acupuncture • Alcohol & Drug Addiction Treatment • Bandages • Breast Pumps and Supplies • Chiropractor • Copays and deductibles • Crutches • Dental Treatment • Doctor Visits • Eyeglasses, contact lenses and exams • Fertility Enhancements • Prescriptions • Over-the-counter drugs (only with a written prescription) • Hearing Aids and Batteries • Nursing Services • Physical Therapy • Psychiatric Care • Smoking Cessation • Thermometers • And More! HOW DOES YOUR HSA OF FSA AFFECT YOUR SPENDABLE INCOME? This is for illustration purposes showing savings that may be achieved with an HSA or FSA. Actual tax rates will vary by individuals and state taxation. Gross Salary Less Pre-tax deductions for HSA Gross taxable income Estimated tax (27.65%)* Take-home pay Less costs for out-of-pocket medical expenses Total spendable income Without HSA or FSA $40,000 $40,000 $11,060 $28,940 $2,500 $26,440 With HSA or FSA $40,000 $2,500 $37,500 $10,369 $27,131 $27,131 Savings = $691 *Assumes 15% federal income tax, 5% state income tax, and 7.65% Social Security tax. Spending Account Website HTTPS://MYSPENDINGACCOUNT.WAGEWORKS.COM/ 2018 Recovery Centers of America Benefit Guide | 11

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