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Learn more about the Deferred Compensation Plan


Effect on Taxes

Contributions to HCFSA are made through automatic payroll deductions on a before-tax basis. Therefore, your taxable income on your Form W-2 will be reduced for federal income taxes and Social Security taxes (FICA). HCFSA will not affect your state or local taxes.

HCFSA and Federal Itemized Deductions

The expenses that qualify as eligible health care expenses for HCFSA are generally the same for federal itemized deductions. Any expenses paid or reimbursed under HCFSA cannot be taken into account when calculating your federal itemized tax deductions and vice-versa.

With HCFSA, you may obtain pre-tax benefits on health care expenses whether or not they exceed the federal itemized deduction minimum of 7.5%.

Your actual tax savings under HCFSA will vary depending on your income, whether you pay FICA taxes, the number of your dependents, and your eligible expenses.

While you may use both HCFSA and federal itemized deductions in the same tax year, you must be sure that:

• Your health care itemized deductions are reduced by what you receive in the applicable Plan Year from HCFSA, and
• You do not claim the same expense more than once.

Example: Married employee earning $60,000 declaring spouse with two dependents and filing jointly; HCFSA annual contribution $2,500 and employee incurs $2,452 in reimbursable health care expenses;