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.