Flexible Spending Accounts: October 2015

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1 Flexible Spending Accounts: October 2015

2 Contents Ford s Flexible Spending Accounts What is a Flexible Spending Account (FSA)? How much can I contribute to an FSA? How can I keep track of my account balance? The Health Care Flexible Spending Account Why contribute to a Health Care FSA? The Health Care FSA show me the money! Enrolling in a High Deductible Health Plan (BMP-PPO or FMP-PPO)? The HSA together with the LPFSA show me MORE money! How do I access my Health Care FSA Funds? The Dependent Care Flexible Spending Account Why contribute to a Dependent Care FSA? The Dependent Care FSA show me the money! How do I access my Dependent Care FSA funds? The Fine Print: Flexible Spending Account Rules Health Care FSA Rules Dependent Care FSA Rules 2 The policies, plans and programs described in this guide are not contracts, and do not alter any at-will relationship the Company has with its employees. The Company may modify or terminate these policies, plans and programs at any time. You may request a printed copy of any benefits Summary Plan Description or Summary of Material Modification, at no charge, by contacting the National Employee Services Center (NESC) at

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4 What is a Flexible Spending Account (FSA)? Tax-advantaged savings accounts you can use to set aside pre-tax dollars to reimburse yourself for eligible expenses The Health Care FSA for which you re eligible depends on which medical plan you choose, if any The Dependent Care FSA is available to everyone ONLY for BMP-PPO and FMP-PPO participants ONLY for CMP-PPO and HAP participants, and employees NOT enrolled in a Ford health care plan Use for medical, Rx, dental and vision throughout the year Until deductible is met, use ONLY for dental and vision After deductible is met, use for medical, Rx, dental and vision Can be combined with HSA for even greater tax savings Used for eligible child or adult dependent day care expenses 4

5 How much can I contribute to an FSA? During Annual Enrollment, you decide how much pre-tax money to set aside up to the IRS maximum Estimate your contributions carefully to avoid forfeiting unused money at the end of the year! Minimum: $50 Minimum: $50 Maximum: $2,550 1,2 Maximum: $5, You cannot contribute more than $2,550 per year to a Health Care FSA. However, if your spouse/same-sex domestic partner is eligible to participate in an employer-sponsored Health Care FSA (including Ford), the maximum contribution for EACH of you is $2, You can carry over up to $500 of unused Health Care FSA contributions to the following year. 3 $5,000 is the maximum Dependent Care FSA contribution per family per year, even if your spouse/same-sex domestic partner is eligible to participate in an employer-sponsored DCFSA. 5

6 How can I keep track of my account balances? Check balances Withdraw funds from your account and view account activity Look up eligible expenses Upload and store receipts for tax records Select a reimbursement method (check or direct deposit) Choose or text for account alerts All of the above, plus Snap photos of receipts Receive account alerts by text or 6

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8 Why contribute to a Health Care FSA? Your FSA contributions are deducted from your pay before taxes are taken out, so you save on Federal income and Social Security (FICA) taxes by reducing your taxable income You are not taxed on reimbursements from your FSA for eligible health care expenses You can make direct payments from your FSA for eligible expenses by using the WageWorks Health Care Card The full amount you elect is available on the first day of the plan year You have until April 30 of the following year to request reimbursement for expenses incurred during the plan year 8

9 The Health Care FSA show me the money! Gross annual pay (estimate) $60,000 Gross annual pay (estimate) $60,000 Estimated tax rate (30%) $18,000 Maximum annual Health Care FSA contribution* $2,550 Net annual pay = $42,000 Adjusted gross pay = $57,450 Estimated annual health care* expenses $2,550 Estimated tax rate (30%) $17,235 Final take-home pay = $39,450 Final take-home pay = $40,215 *IMPORTANT: Eligible medical and prescription expenses can be paid only with a General Purpose Health Care FSA, which is available to CMP-PPO and HAP-HMO participants, and employees who are not enrolled in a Ford medical plan. If you re enrolled in the BMP-PPO or FMP-PPO, your plan is a Limited Purpose Health Care FSA, with which you can pay only for eligible dental and vision expenses until you meet your annual deductible. See pages for details. 9 Find out how much YOU can save with a Health Care FSA at WageWorks.com

10 When it comes to saving money, TWO tax-advantaged accounts are better than one. 10

11 Enrolling in a High Deductible Health Plan (FMP-PPO or BMP-PPO)? You can set aside before-tax dollars to a Health Savings Account (HSA) and a Limited Purpose Health Care FSA (LPFSA) to reduce your taxable income and your tax obligation deductible is met deductible is met From for dental, vision From for medical, Rx WageWorks pays from the right account First, from for medical, Rx, dental, vision until $0 remains Then, from for medical, Rx, dental, vision for remainder of year 11 *Remember, you ll forfeit any unused FSA balance over $500 at the end of the year!

12 The LPFSA together with the HSA show me MORE money! Gross annual pay (estimate) $60,000 Gross annual pay (estimate) $60,000 Maximum annual LPFSA contribution $2,550 Maximum annual LPFSA contribution $2,550 Adjusted gross pay = $57,450 Maximum annual family coverage HSA contribution $6,750 Estimated tax rate (30%) $17,235 Adjusted gross pay = $50,700 Estimated annual medical/rx expenses $6,750 Estimated tax rate (30%) $15,210 Final take-home pay = $33,465 Final take-home pay = $35, Find out how much YOU can save with an LPFSA and HSA at WageWorks.com

13 How do I access my Health Care FSA funds? Pay for eligible products or services during the current plan year with this convenient debit card OR Download the app at WageWorks.com/aboutmobile File claims and submit required documentation from anywhere Check your balance anytime OR Pay your health care expenses yourself Submit a claim form and required documentation to WageWorks Get reimbursed by check or direct deposit 13

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15 Why contribute to a Dependent Care FSA? You contribute tax-free dollars to a Dependent Care FSA that you can use to reimburse yourself for dependent day care expenses You may use these tax-free funds to pay for dependent day care expenses for: Your eligible dependent child(ren) up to age 13, and/or Your eligible dependent relative of any age who is physically or mentally incapable of self-care Visit WageWorks.com for a comprehensive list of eligible Dependent Care FSA expenses 15

16 The Dependent Care FSA show me the money! Gross annual pay (estimate) $60,000 Gross annual pay (estimate) $60,000 Estimated tax rate (30%) $18,000 Maximum annual Dependent Care FSA contribution* $5,000 Net annual pay = $42,000 Adjusted gross pay = $55,000 Estimated annual dependent care expenses $5,000 Estimated tax rate (30%) $16,500 Final take-home pay = $37,000 Final take-home pay = $38,500 *IMPORTANT: The maximum contribution for 2015 is $5,000 per family ($2,500 if married filing separately). 16 Find out how much YOU can save with a Dependent Care FSA at WageWorks.com

17 How do I access my Dependent Care FSA funds? Download the app at WageWorks.com/aboutmobile File claims and submit required documentation from anywhere Check your balance anytime OR Best for expenses that ARE NOT the same each time Pay your dependent day care expenses yourself Submit a claim form and itemized receipts to WageWorks Get reimbursed by check or direct deposit 17

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20 Health Care FSA rules Expenses must meet certain criteria to be eligible for reimbursement from a Health Care FSA You may change your Health Care FSA contributions during the year only if you have certain qualifying events Your WageWorks Health Care Card is a debit card that can be used only to pay for current year expenses For expenses dated the previous year, submit a Pay Me Back claim form and required documentation by April 30 Your WageWorks Health Care Card will be suspended if: You do not provide proof of eligible expense when required, which results in unverified transactions in your account The amount of unverified transactions is 99% or more of your remaining FSA balance for over 90 days Your WageWorks Health Care Card will be reactivated after the transactions are verified 20

21 Health Care FSA rules, cont d The IRS may require you to submit proof of eligible expense to verify that a WageWorks Health Care Card transaction is eligible for reimbursement If you use your WageWorks Health Care Card to pay a health care provider (hospital, doctor, or dentist) for any services other than a flat-dollar copay: WageWorks will send you a Card Use Verification (CUV) form via You must complete the CUV and submit it to WageWorks along with one of the following: BEST: An Explanation of Benefits (EOB) statement from your health insurance company (BCBSM or HAP) ACCEPTABLE: a statement from your health care provider that specifies: The date of service Who received the service What service was provided How much you paid for the service 21

22 Health Care FSA rules, cont d Proof of eligible expense is NOT required when you use your WageWorks Health Care Card at stores with an IRS-approved Inventory Information Approval System (IIAS) The IIAS automatically verifies the eligibility of an expense Keep your receipts in the event of an IRS audit Eligible IIAS expenses include: Prescription drugs Over-the-counter health care items Certain over-the-counter medications require a prescription from your physician and an itemized receipt For more information: List of IIAS merchants: sigis.com Tips for using your WageWorks Health Care Card: wageworks.com/card 22

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24 Dependent Care FSA rules You can set aside tax-free dollars to pay for eligible dependent day care expenses if: You (and your spouse, if you re married) work or are looking for work, or Your spouse attends school full-time, or Your spouse is incapable of self-care You can be reimbursed only up to the balance that is in your account at the time of the request If your reimbursement request is for an amount greater than your account balance, WageWorks will reimburse you up to the amount in your account and hold the rest of the claim until your account is funded Then, WageWorks will reimburse you for the rest of the claim You cannot change your Dependent Care FSA contributions during the year The Dependent Care FSA cannot be used to pay for dependent health care expenses 24

25 Dependent Care FSA rules, cont d The IRS requires that dependent day care expenses meet certain criteria to be eligible for reimbursement from a Dependent Care FSA Click here to view WageWorks list of eligible expenses The Dependent Care FSA versus the Federal tax credit Each offers an opportunity to save on income taxes You may not use both the Dependent Care FSA and the tax credit for the same expense, but you can use both in the same year if you use the FSA for some expenses and the tax credit for others, subject to IRS limits Every dollar reimbursed from your Dependent Care FSA reduces, dollar-for-dollar, your maximum eligible expenses under the tax credit One option may save you more than the other depending on your income, the number of dependents you have, and other factors Consult a professional tax advisor, or refer to IRS publication 503 for details about the tax credit 25