Translate this page
Money-saving open enrollment tips
Thursday, December 27th, 2012
Issue 52, Volume 16.
Plus, an important feature of health care flexible spending accounts, which many people use to reduce their tax bite, is changing next year (more on that below).
Here’s what to look for when reviewing benefit options. Many benefit plans – especially medical – change coverage details from year to year. If you’re offered more than one plan, compare features side-by-side (including plans offered by a spouse’s employer) to ensure choosing the best alternative.
Common changes include:
• Dropping or replacing unpopular or overly expensive plans.
• Increased monthly premiums for employee and/or dependent coverage.
• Increased deductible and/or co-pay amounts for doctor visits, prescription drugs, hospitalization, dental or vision benefits, etc.
• Revised drug formularies
• Doctors and hospitals sometimes withdraw from a plan’s preferred provider network.
• Raising maximum yearly out-of-pocket expense limits.
If offered by an employer, health care and dependent care flexible spending accounts (FSAs) can significantly offset the financial impact of medical and dependent care by letting you pay for eligible out-of-pocket expenses on a pre-tax basis; that is, before federal, state and Social Security taxes are deducted from one’s paycheck. Thisreduces a person’s taxable income and therefore, taxes.
It is possible to use a health care FSA to pay for IRS-allowed medical expenses not covered by a medical, dental or vision plan. Check IRS Publication 502 at www.irs.gov for allowable expenses. Dependent care FSAs let you use pre-tax dollars to pay for eligible expenses related to care for a child, spouse, parent, or other dependent incapable of self-care.
If one earns $42,000 per year and contributes $1,000 to a health care FSA and $3,000 for dependent care, his or her taxable income would be reduced to $38,000. Resulting net income, after taxes, would be roughly $1,600 more than if one had paid for those expenses on an after-tax basis.
Effective January 1, 2013, employee contributions to health care FSAs are now limited to $2,500 a year; however, if a spouse has an FSA at work, one still may contribute up to $2,500 to each account. The dependent care FSA limit remains unchanged at $5,000. Health care and dependent care account contributions are not interchangeable.
Estimate planned expenses carefully because one must forfeit unused account balances. Some employers offer a grace period of up to 2 ˝ months after the end of the plan year to incur expenses, but that’s not mandatory, so review enrollment materials.
The Fallbrook Village News has tightened its' policy regarding comments.
While we invite you to contribute your opinions and thoughts, we request that you refrain from using vulgar or obscene words and post only comments that directly pertain to the specific topic of the story or article.
Comments that are derogatory in nature have a high likelihood for editing or non-approval if they carry the possibility of being libelous.
The comment system is not intended as a forum for individuals or groups to air personal grievances against other individuals or groups.
Please, no advertising or trolling.
In posting a comment for consideration, users understand that their posts may be edited as necessary to meet system parameters, or the post may not be approved at all. By submitting a comment, you agree to all the rules and guidelines described here.
Most comments are approved or disregarded within one business day.
Valley NewsAnza Valley OutlookFallbrook.orgSourcebookPDF VersionCoupon CornerSign up for iNewsEarthquake Info
357 Medical marijuan...
265 Arrests now numb...
246 13-year-old Fall...
211 Vote ‘yes’ on Pr...
205 Arrests now tota...
170 UPDATE: Authorit...
168 Man hit, killed ...
166 Marine commits s...
153 13-year-old Fall...
149 Little Mexico in...
148 EXCLUSIVE UPDATE...
145 Increased Noise ...
137 Fallbrook reside...
133 Methamphetamine ...
125 Mother-in-law ar...