This year's open enrollment period for establishing a flexible spending account (FSA) runs Oct. 25-Nov. 5, with an effective date of Jan. 1, 2005. The FSA, administered by Ceridian Benefit Service, gives Eastern Michigan University employees an easy, convenient way to set aside money on a pre-tax basis to pay medical, dental and dependent care expenses.
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"The FSA is a good way to save taxes on regular and predictable out-of-pocket, medical expenses, which one has during the course of a calendar year," said Jeanette Hassan, director of benefits. "Each of us has a doctor's appointment, a prescription which must be filled, new glasses that need to be ordered or over-the-counter medication for the common cold. All of these expenses can be paid with pre-tax dollars through the FSA program."
These expenses include:
Medical/dental costs, which could include deductibles, co-payments, lab fees, any doctor, hospital or dentist fees not reimbursed, and any over-the-counter medication (aspirin, allergy, cold remedy, antacids).
Dependent care costs, which could include child day care, nursery school and care for a disabled dependent or elderly parent(s).
Other related costs, which could include all kinds of approved health-related expenses, such as contact lens solution, oxygen equipment and more.
To establish an FSA, an employee must decide how much of their salary to set aside each payday. That amount is deducted from an employee's pay on a pre-tax basis and placed in a medical or dependent care flexible spending account. Employees will continue to pay their out-of-pocket expenses. Employees then submit their receipts to Ceridian and will be reimbursed for their eligible costs from their FSA accounts, Hassan said.
"Those who do not have many or any expenses, the FSA may not be for them. So the key is to plan," Hassan said. "Look back over the past year at your out-of-pocket medical expenses and then look ahead and anticipate your future yearly regular expenses for the coming year. That is the amount one should use."
The money, which was exempt from taxes when it went into the account, is not taxed when an employee removes it. As a result, most FSA participants find that, because their taxes have been reduced, their take-home pay increases when they start an FSA account. EMU employees can set up to a maximum of $5,000 per year per family for health expenses and up to $5,000 per family for dependent care expenses. Faculty and 100 percent lecturers are charged a minimum fee to set up an FSA account.
Ceridian offers a password-secured Web site, which will allow employees to keep track of their accounts as well as the option to have their reimbursements deposited directly into their bank accounts.
Under federal law, money cannot be interchanged between medical/dental and dependent care accounts, and unused money will be forfeited at the end of the year.
The Benefits Office has scheduled educational meetings to explain this benefit and how it will reduce employees' taxes. Meetings are scheduled Monday, Oct. 25, 3:30-4:30 p.m.; and Tuesday, Oct. 26, 8:30-9:30 a.m., both in Room 108 of the Marshall Building.
All enrollment forms must be turned in no later than Friday, Nov. 5. Elections made during this open enrollment period will remain in effect until Dec. 31, 2005.
If an employee does not enroll in the plan this year, he or she can sign up during next year's enrollment period or within 30 days of the birth or adoption of a child for the Dependent Care Account.
FSA packets are available in the Benefits Office or can be e-mailed to you by contacting Brandi Bonney at Brandi.Bonney@emich.edu.
