Reimbursement Accounts
Your State of Florida benefits include three Reimbursement Accounts that can provide you with a tax break on your predictable out-of-pocket costs:
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Medical Reimbursement Account* |
Limited Purpose Medical Reimbursement Account |
Dependent Care Reimbursement Account |
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Up to $5,000 in pre-tax dollars to pay yourself back for predictable out-of-pocket medical, dental and vision expenses eligible for deduction under IRS tax rules but not paid by insurance or reimbursed from any other source. |
Up to $5,000 in pre-tax dollars to pay yourself back for predictable out-of-pocket dental, vision and over-the-counter medication expenses eligible for deduction under IRS tax rules but not paid by insurance or reimbursed from any other source. |
Up to $5,000 in pre-tax dollars each year ($2,500 if you're married filing separate tax returns) to cover care for a child, disabled spouse or elderly adult who is dependent on you and needs care so that you (and your spouse if you're married) can work. |
*Not available if you enroll in a Health Savings Account.
How do FSAs work?
Money you set aside in the accounts is taken off the top of your pay before taxes. If you pay federal income tax and Social Security tax, this creates at least a 20% savings on most of the health or dependent care services you buy. The savings could be more - depending on your income tax rate. And yet, even when you pay no income taxes, the Social Security tax savings is about 7.5% - or $7.50 for each $100 you spend.
The FSA Tax Advantage: An Example
If you:
- Are in the 15% federal income tax bracket (for 2005, generally $7,300-$29,700 for single, and $14,600 - $59,400 for married filing jointly).
- Have an eligible expense of $150.
Your true cost for that expense would be about:
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$176 after-tax because you have to earn about $176 to clear $150 after taxes |
$150 pre-tax because the entire $150 is never taxed and goes directly to your expenses |
Claiming Your Reimbursement Account Benefits
You claim Reimbursement Account benefits by submitting a claim form and appropriate supporting documentation to PeopleFirst.