University Human Resource Services
Tax Saver Benefit (TSB)
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Eligibility
All Full-time appointed employees of Indiana University can elect participation in the Tax Saver Benefit Plan.
Plan Provisions
The Tax Saver Benefit Plan allows eligible Indiana University employees to reduce out-of-pocket costs for eligible medical and dependent care expenses by using "tax-exempt" dollars. TSB dollars are never taxed by federal, state, local or FICA. Dollars usually paid in taxes end up in the employee's paycheck under the TSB plan. Employees do not have to be enrolled in an Indiana University-sponsored health care plan to take advantage of these tax savings.
Pre-Tax Premiums
Eligible employees automatically receive preferential treatment for their premiums upon enrollment in medical, dental and/or Personal Accident Insurance plans.
Health Care Expense Reimbursement Account*
- Any medical, dental or vision expense allowed by the
IRS. Generally expenses must be incurred during the tax year or the
two-month grace period (January and February) following the end of the
plan year and submitted for reimbursement by April 15 of the following
year.
- Maximum of $6,000 per year
- Examples of IRS-allowed expenses*
- Deductibles and co-payments
- Routine care/physical exams
- Certain over-the-counter drugs and medicines
- Transportation for medical services
- Weight-loss programs prescribed by a physician for a specific diagnosis
- Stop-smoking programs
- Hearing aids and related expenses
- Prescriptions, including birth control pills
- Dental care and orthodontia
- Acupuncture
*For HDHP PPO & Medical Savings Plan participants, reimbursements are limited to dental and vision services, and other services only after the HDHP deductible is met.
- Examples of expenses not allowed by the IRS:
- Individual or group medical premiums
- Expenses covered by an insurance or government program
- Cosmetic procedures
- Retin-A (unless for medical diagnosis), Rogaine and any other medicines prescribed for cosmetic purposes
- Expenses related to long-term care (personal and custodial care)
Dependent "Day" Care Expense Reimbursement Account *
- Necessary expenses for day/evening care for dependents to allow employee and/or spouse to work during the plan year.
- Includes cost of care for
- children under age 13
- other qualifying persons who need care due to mental or physical disabilities (older children, spouse, or older adults living in employee's home)
- Maximum of $5,000 per year, or
- Maximum of $2,500 per year if married and filing separately
- Examples of expenses not allowed by the IRS:
- Kindergarten
- Overnight camp
- Expenses paid but not yet incurred
- Claims must be submitted by April 15 following the end of the plan year.
*Notes for Expense Reimbursement Accounts
- Employee must enroll in Expense Reimbursement Accounts each November during Open Enrollment to be eligible for benefits the following year. Employees will not be enrolled in reimbursement accounts without taking specific action for enrollment each year.
- The employee's annual pledge amount is available for reimbursement from the first day of the plan year (money can be "withdrawn" faster than "deposited")
- It is recommended that employees estimate conservatively: according to IRS regulations, any amount left over at the end of the year in a reimbursement account may not be returned to the employee nor moved between accounts.
TSB Dos and Don'ts
- Do list the annual amount you want to contribute; don’t list the per-paycheck 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 health expenses for you and your tax dependents in the Health Care Reimbursement Account section; don't include health expenses in the Dependent Care Account. Dependent care is for "day care" expenses, not health expenses.
- Do estimate your expenses conservatively; don't include expenses that you are unsure will be incurred.
Plan Contributions
Indiana University covers the administrative costs of the TSB Plan.
Enrollment Provisions and Coverage Period
The TSB Plan is offered on a tax year basis, and elections for participation in reimbursement accounts expire automatically at the end of each calendar year. The employee determines the annual pre-tax contribution, which is then deducted from salary and deposited directly into the respective TSB reimbursement account in the employee's name. The annual election is divided equally by the number of regular pay periods remaining in the year.
Continuing employees must enroll each year during the Open Enrollment period in November for participation the following year in a reimbursement account.
New employees eligible for participation must complete the appropriate section of the benefit enrollment form within 30 days of the date of hire. Enrollment is not allowed during November and December for the current year.
Employees may change or stop the salary reduction agreement for participation in the Plan only when an IRS-defined change-in-status event is experienced.
- A Change of Status event is a significant family or employment change, such as: marriage, divorce, death of a dependent, birth of a child, spouse's termination or commencement of employment, and termination or commencement of leave-without-pay.
- Changes must be consistent with the event and must be requested in writing within 30 days of the date of the event.Forms should be submitted to the campus Human Resource office.
How the TSB Plan Saves Money
Suppose an employee and his /her spouse require prescription drugs to treat high cholesterol, arthritis and depression. To maximize their savings, the couple requests that their prescriptions be filled with generic medications. Even with the cost savings of purchasing generic drugs, the couple’s copay for these drugs totals $480 per year.
The Tax Saver Benefit Plan can further maximize the couple’s savings. Normally, they would pay for their copays (which are out-of-pocket expenses) with after-tax income. However, using TSB, they would pay their prescription copays, and then receive reimbursement with tax-free income contributed from the employee’s paycheck.
Contributing pretax income to a TSB account is like getting a further discount on the drugs since they don’t have to earn as much money to pay for them. The money contributed to TSB reimbursement accounts by automatic salary reduction is not subject to federal, state, local, or FICA taxes. The amount of the savings depends on income, marital filing status, withholding allowances, and resulting tax rate. For example, a married employee with an annual salary of $34,000 with no allowances and no other deductions may save approximately 25.78 percent in taxes.
The following is an example only and is based on an annual salary of $34,000. Tax savings will depend on one’s individual tax rate. Tax savings really do add up.
Example:
| Not using TSB | Using TSB | |
| Contribution to reimbursement account | $0 |
$480 |
| Cost of eyeglasses | $480 |
$480 |
| Income taxes paid to take home $480 | $167 |
$ 0 |
| Amount you must earn to pay copays | $647 |
$480 |
| Amount saved | $0 |
$167 |
Claims
Claims will be honored for services received from the date of your reduction agreement through December 31 of the Plan year or the grace period of January and February following the end of the plan year. Eligible claims may be submitted at any time during the plan year or grace period, but no later than April 15 following the end of the plan year.
If you have questions about allowable expenses or making a claim, contact The Nyhart Company Claim Center at 800-284-8412.
Customer Service Contacts:
The Nyhart Company
For questions concerning qualified expenses, claims and reimbursement account balances:
8415 Allison Pointe Boulevard, Suite 300
Indianapolis, IN 46250-4201
Phone: 800-284-8412
Fax: (888) 887-9961
Web site: iutsb.nyhart.com
E-mail:
To mail or fax claims:
Attn: Claim Reimbursement
The Nyhart Company, Inc.
8415 Allison Pointe Boulevard, Suite 300
Indianapolis, IN 46250-4201
Fax: (888) 887-9961
