FSA in 2013, health care FSA contributions will be limited. Beginning Jan. 1, 2013, you will only be able to contribute a maximum of $2,500 to a health care FSA. This change is part of the health reform law. This change does not apply to dependent care FSAs. After 2013, the maximum may increase to allow for inflation. yOU’LL PAy LESS iN TAXES. A health care flexible spending account, or FSA, lets you set aside money, before taxes, to pay or reimburse yourself for eligible medical, dental and vision expenses. If you have the option of enrolling in a dependent care FSA, you can save even more by setting aside money to pay for eligible dependent care expenses. How the FSA works 1. Estimate your expenses for the year. Then decide how much money you want to set aside when you enroll. You must re-enroll each year even if you are not making any changes. 2. Money will be set aside from each paycheck before federal, state or Social Security taxes are taken out. The amount you save in taxes depends on how much you set aside and the percentage you usually pay for taxes. 3. As you pay for eligible expenses, you can reimburse yourself from your FSA. Your FSA may come with a Health Care Spending Card MasterCard, ® which makes it easy to pay from your FSA. There’s no need to write checks or submit claim forms. The “use it or lose it” rule. Yes, it’s true. If you don’t spend your FSA dollars by the end of the plan year, you will lose that money. Most people are able to spend the money they set aside. FSA and Dependent FSA example The Gonzales family will save $889. The Gonzales family sets aside $2,000 aside for doctor visits, prescriptions and eye glasses. The family sets aside $1,000 in a dependent care FSA for day care expenses. Setting aside a total of $3,000, see how their tax savings add up. Not sure how much to set aside in an FSA? Use the FSA Savings Calculator on welcometouhc.com to help you. Saved $510 Federal tax at 17% Saved $229 Federal tax at 7.65% Saved $150 Federal tax at 5% Total Savings $889 2 welcometouhc.com Hypothetical example is for illustration purposes only. Costs, circumstances and tax rates may vary.