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Oct. 25, 2012 Volume 34, No. 10

Two accounts allow MU employees to pay no tax on pocket expenses


Annual enrollment open through Nov. 2

The window to change your University of Missouri System health benefits is open through Nov. 2. Till then, employees can change plans or add or subtract dependents to their plans.

If you are happy with your current elections and dependent coverage, you do not need to do anything. However, the Health Care Flexible Spending Account (FSA) and Dependent Care FSA require re-enrollment each year. 

Health Care FSA is an IRS-approved, tax-exempt account used to pay annual health expenses, which would be out-of-pocket medical expenses not covered by your UM System health plan. The Dependent Care FSA allows you to use pre-tax funds to pay child/dependent care expenses. You pay no taxes on these expenses.

How do the separate accounts work? When you enroll in FSAs, you estimate your family’s annual health or day care expenses and choose the amount of money you want to set aside for them. The amounts are deducted after each pay period.

For 2013, your Health Care FSA contribution must be between $300 and $2,500 (last year, the limit was $4,500).  For Dependent Care FSA, the contribution ceiling is $5,000 and $2,500 if married and filing separate tax returns. As medical expenses during the year are incurred, you request withdrawals from your account for reimbursal. 

You can opt to have reimbursements deposited directly into your checking account.

The advantage of FSAs is that you do not pay tax on your out-of-pocket medical or day care expenses. But it’s important to estimate yearly out-of-pocket expenses accurately.

“Both accounts are ‘use or lose it,’ meaning that if you have funds in your account at the end of plan year, you will forfeit them,” said Kelli Holland, a UM System senior marketing and communications coordinator. 

“The Health Care FSA does include a grace period, which means that you can use the funds for expenses that are incurred between Jan. 1 and March 31 of the following plan year,” Holland said.

Estimating day care costs is easier than estimating health care costs. To help with the latter, you can use the myBenefit Decision Center in myHR as an aid, Holland said. 

“The myBenefit Decision Center helps you to compare plans and out-of-pocket expenses,” she said.

Changes made during annual enrollment take effect Jan. 1, 2013.

For more information on FSAs, visit