Tax Saver Benefit (TSB) Plan

The TSB plan is designed to save tax dollars when the eligible employee pays for certain IRS-eligible expenses. When the employee elects to set aside salary contributions into one or both TSB expense reimbursement accounts, the contributions are not subject to federal, state, local, or FICA taxes. This can mean substantial savings to the employee. Eligible employees may elect to participate in either or both reimbursement accounts.

• Health Care Reimbursement Account - for health care expenses incurred by the employee or the employee’s eligible tax dependents that are not eligible for health plan reimbursement.
• Dependent Care Reimbursement Account - for child or elder day care (not health care) expenses that allow the employee to work.

The TSB expense reimbursement accounts are administered by The Nyhart Company.

Points to Remember

• Estimate conservatively. Unused TSB contributions are forfeited, and cannot be “rolled over” to the next year, nor can they be moved between accounts.
• All full-time appointed employees are eligible; the employee does not have to be enrolled in a medical or dental plan to participate.
• Contributions are elected on an annual basis. Annual elections cannot be changed during the year unless the employee experiences an IRS-defined change in status.
• The annual election amount is eligible from January 1. (Money can be taken out before it is put in.)
• The employee must enroll each year in TSB reimbursement accounts in order to participate—enrollment is not automatic each year.
• In order to be reimbursed from a TSB account, the expenses claimed must be eligible under IRS regulations, incurred during the tax year, and submitted by the following March 31.
• If participation (incurring eligible claims) is to continue while an employee is on leave without pay, regular TSB contributions must be made on an after-tax basis.

TSB Dos and Don’ts

In order to avoid some of the common mistakes made when completing the enrollment form:

• Do list the annual amount you want to contribute; don’t list the per-pay-check amount.
• Do estimate pledges based on expenses anticipated during the tax year (January 1 through December 31); don’t estimate on an academic year.
• Do list the amount of the health expense pledge for the employee and the employee’s tax dependents in the Health Care Reimbursement Account section; don’t include any health expenses in the Dependent (Day) Care Reimbursement Account section.

Contact Nyhart with questions about whether specific expenses are eligible.

Examples of reimbursable health care expenses

• Prescriptions
• Deductibles and copays
• Routine care/physical exams
• Transportation for medical services
• Vision exams, prescription lenses, frames, and contacts
• Radial keratotomy
• Hearing aids and related expenses
• Weight-loss programs and services for obesity
• Stop-smoking programs
• Dental care and orthodontia
• Acupuncture
• Over-the-counter medicines

Examples of expenses not allowed by IRS regulations

• Cosmetic procedures or medicines prescribed for cosmetic purposes
• Expenses paid but not yet incurred
• Kindergarten
• Overnight camp

Next Article: New TSB Card Option