How an FSA Cafeteria Plan Works
Click "here" to return to the "Cafeteria Plans" Page.
Whether you're a single person, single parent, part of a dual-income household, or a family person with a non-working spouse, A Cafeteria Plan with Flexible Spending Accounts (FSA's) will provide you with additional benefits and more take home pay. See the examples below.
|
Single Parent
In the illustration below, the single parent earns $19,200 and has two children. She uses a Cafeteria Plan to pay the premium for dependent medical coverage and to pay for the cost of medical deductibles and dental care. In addition, she has opted to pay her child care expenses out of her pre-tax dollars. In this way, she increases her take home pay by $109 each month...or $1,308 this year. That's an additional 15% take home pay
| Working Couple
This man and wife both work. They have two children. The husband makes $27,500 and his wife earns $14,500 per year. They use a Cafeteria Plan to help pay the premium for dependent medical coverage and pay for the orthodontist bills for the children. With both of them working, they also utilize the plan to pay for necessary childcare expenses. The chart shows that this couple increases their monthly take-home by $220...or $2,640 per year. That gives them additional money for the emergency expenses every family has...
| Family Person with Non-Working Spouse
With grown children, and only one spouse working, this couple has no childcare expenses. The annual salary of the working spouse is $48,000. They use a Cafeteria Plan to pay the premium for dependent medical coverage, meet their medical deductibles, and pay dental expenses. A Cafeteria Plan gives this couple an additional $134 monthly take-home, or $1,608 this year...a nice raise for the family budget!
|
|
|
The Single Parent |
Working Couples |
Family Person |
|
|
Without
Cafeteria
Plan |
With
Cafeteria
Plan |
Without
Cafeteria
Plan |
With
Cafeteria
Plan |
Without
Cafeteria
Plan |
With
Cafeteria
Plan |
|
Total Monthly Pay
Less Non-Taxable Benefits
Insurance Premiums
Medical/Dental Expenses
Childcare Expenses
Total Pay Subject To Tax
Less Deductions
Federal & State Taxes*
Social Security Tax
After Tax Income
After Tax Expenses
Insurance Premiums
Medical/Dental Expenses
Child-Care Expenses**
Spendable Income
Annual Increase In
Take-Home Pay
|
$1,600
0
0
0
$1,600
-$192
-$122
$1,286
-$187
-$60
-$175
$864
|
$1,600
-$187
-$60
-$175
$1,178
-$115
-$90
$973
0
0
0
$973
$1,308 |
$3,500
0
0
0
$3,500
-$487
-$268
$2,745
-$291
-$100
-$350
$2,004 |
$3,500
-$291
-$100
-$350
$2,759
-$324
-$211
$2,224
0
0
0
$2,224
$2,640 |
$4,000
0
0
0
$4,000
-$667
-$306
$3,027
-$379
-$75
__
$2,573 |
$4,000
-$379
-$75
0
$3,546
-$568
-$271
$2,707
0
0
__
$2,707
$1,608 |
|
|
|
|
|
|
|
*Federal and State taxes reflect 2004 Federal Tax rates and typical state taxes
**Does not include any available tax credit for child care expenses
|
_______________________________________________________
|
|
