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Tax Free Advantage

Your share of the cost of medical coverage and dental coverage is withheld from your paycheck with pre-tax dollars before federal, state and social security taxes are taken out. Your contributions to the Flexible Spending and Commuter Reimbursement Accounts are also made on a tax-free basis.

Here is an example to show how pre-tax contributions and enrolling in a Flexible Spending and Commuter Reimbursement Account can help you save on taxes.

Let us assume the following:

Employee Elections Annual Employee Cost *
Medical/Vision 90/70 Plan, Family $6,924.00
Delta PPO, Family 1,650.00
Total Medical and Dental Premiums $8,574.00
Employee Expenses  
Annual Medical Expenses 2,000.00
Annual Child Care Expenses 1,500.00
Annual Metro Card Expenses 1008.00
Total Yearly Contributions $4,508.00
Annual Salary: $55,000 Tax Bracket*: 25%

  Tax-Free With FSA Tax Free Without FSA After-Tax
Annual Pay $55,000 $55,000 $50,000
Total Medical and Dental Premiums 8,574 8,574 0
Medical and Dependent Care FSA 3,500 0 0
Commuter Reimbursement 1,008 0 0
Taxable Income 41,918 46,426 55,000
Federal Income Tax 10,480 11,607 13,750
Social Security Tax 3,206 3,552 4,208
After-tax Expense 0 4,508 13,082
Take-Home Pay 28,232 26,759 23,960
Tax Free Savings from FSA $1,473
Total Tax Free Savings $4,272

* Based upon Medical plan and dental plan premium rates effective July 1, 2008.

** If state taxes were included in this example, your tax savings would be even greater.