|
|
|
|
|
UFCW LOCAL 1776 and
PARTICIPATING EMPLOYERS HEALTH and WELFARE FUND |
|
| Tax Advantages |
|
You
will not pay federal income or Social Security (FICA) taxes on the portion of
Benefits Credits directed to the Medical Flexible Spending Account. (In
contrast, Benefits Credits allocated to the Paid Time-Off Bank under the
Flexible Benefits Plan are subject to withholding taxes (refer to the
section titled "Paid Time-Off Bank" in the Flexible Benefits Plan
Summary for more details)). Depending on where you live, you may be exempt from
state income and/or local taxes on these amounts as well. Check with the Fund
office for details. Because you'll be paying for qualified expenses on a pre-tax basis, these expenses will cost you less than they would if you paid with after-tax dollars. Here's an example of the impact of using the Medical Flexible spending Account instead of paying for the expenses on an after-tax basis. Assume that Mary and Jim are married. They have two dependent children and their out-of-pocket health care cost shows the couple's earnings after taxes and medical care expenses are paid. |
| With Medical Flexible Spending Account |
Without Medical Flexible Spending Account |
|
| Family's Taxable Income (including $1,200 of Benefits credits) | $40,000 | $40,000 |
| Pre-tax Benefits Credits Allocation to Medical Flexible Spending Account | ($500) | ($0.00) |
| Adjusted Gross Income | ($39,500) | ($40,000) |
| Federal Income Tax * | ($5,929) | ($6,004) |
| 7.65% Social Security Tax | ($3,022) | ($3.060) |
| Medical Expenses After-Tax | ($0.00) | ($500) |
| Available Income | $30,549 | $30,436 |
| Difference | +$113 | |
| * Based
upon 2000 Internal revenue Service Form 1040 Tax Tables |
||