Save on taxes by setting aside pre-tax pay to cover 2002 costs
Use Flex Spending Account to pay for health care, dependent care
By DEBORAH STAYMAN
If you have regular out-of-pocket expenses for health care or dependent care, you may be able to deduct thousands of dollars from your taxable income and reduce the taxes withheld from your pay.
The Flex Spending Account is a program PEF and the state negotiated to help members save money on their taxes through two components — the Health Care Spending Account (HCS Account) and the Dependent Care Advantage Account (DCA Account) — that allow you to pay for health care or dependent care with pre-tax dollars.
Enrolling in either benefit is voluntary. How much you save depends on your annual income, the number of dependents you claim on your taxes, and the amount of money you contribute through payroll deductions to your HCS Account and/or DCA Account.
But you have a limited time this fall to take advantage of these options for 2002.
The 2002 open-enrollment period for the HCS Account is September 17 through November 9, 2001. You also have until November 9 to enroll for the DCA Account.
To request an enrollment kit, call 1-800-358-7202 and press 1 for the HCS Account or 2 for the DCA Account or download forms from www.flexspend.state.ny.us.
Informational meetings will be held throughout the state from September 21 to November 5, with locations announced in a paycheck stuffer with the August 29 or September 5 paychecks. The schedule will also be posted on the PEF web site at www.pef.org under Health Benefits News.
How HCSA works
If eligible, you may contribute any amount from $150 to $3,000 annually in pre-tax dollars to pay for out-of-pocket medical, dental, vision or hearing costs not reimbursed by health insurance. Some examples of allowable costs are dental implants, orthodontia, fees paid to non-participating providers, copayments, deductibles, laser eye surgery, contact lenses, and Braille books and magazines.
To enroll in the HCS Account, you must estimate your annual out-of-pocket costs and decide how much money to have withheld from your paycheck.
It’s better to withhold too little than too much, because you will lose anything left over in the account at the end of the year.
Once enrolled, you can mail or fax claims, then receive reimbursement by check or direct deposit.
How DCAA works
If you pay someone to take care of your child, elderly parent, or disabled spouse in order to work, you can set aside up to $5,000 in pre-tax salary through payroll deduction to help pay for these expenses.
The state will contribute up to $600 to your DCA Account to help with dependent-care expenses. If both you and your spouse are state employees you may both enroll and receive a state contribution. However, the maximum amount your family can contribute to the DCAA is $5,000.
Examples of expenses eligible for DCAA reimbursement include child care expenses (up to age 13), summer day camp, before/after school programs, adult day care, home aide, and housekeeper or cook.