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University Human Resources

Tax Saver Benefit (TSB)

On this page: Eligibility | Plan Provisions | Healthcare Reimbursment Account | Dependent Care Reimbursement Account | TSB Dos and Don'ts

Eligibility

All full-time (75% FTE or more) Academic (including Medical Residents) and Staff 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 health and dependent care expenses by using "tax-exempt" dollars. TSB dollars are generally not 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 Premium Conversion

Preferential tax treatment is applied to employee contributions for IU-sponsored medical and dental plans and Personal Accident Insurance. When the employee enrolls in IU-sponsored health plan benefits or Personal Accident Insurance, the employee is authorizing contributions to be automatically taken from the employee's salary on a pre-tax basis.

Participation is automatic with election of an IU-sponsored medical and/or dental plan and Personal Accident Insurance enrollment.

Premiums paid for coverage for registered domestic partners and/or the partner’s child(ren) are not eligible for this preferential tax treatment, unless the employee is eligible to claim the domestic partner and/or the partner’s child(ren) as tax Dependents under IRS Code. As a result, premium contributions associated with domestic partner benefits will be reported on the employee’s annual W-2 Form and will increase the employee’s taxable gross income, unless the employee submits to IU a Certification of Tax-Qualified Dependents (PDF) form. See the domestic partner section for more specifics.

Because the employee's health care premiums receive preferential tax treatment under this plan, IRS regulations state that the employee's health plan selection is in effect for the entire Plan Year and cannot be changed until the next Open Enrollment except under special circumstances defined by IRC Section 125 and by HIPAA special enrollment provisions. These special circumstances are called Changes in Status or Family Status Changes by this plan.

Mid-year changes are made by submitting a Family Status Change request form online in the Employee Center.

From time to time, changes in eligibility will occur. The employee is responsible for notifying the University within 30 days of any changes that affect the employee's Dependents' eligibility. A Dependent ceases to be a covered Dependent on the date that the individual no longer meets the University’s eligibility criteria.

Failure to provide timely notice will result in the employee being responsible for reimbursing the plan for the Employer contributions for the ineligible individual.

Healthcare Reimbursement Account

The IRS allows many medical, dental and vision expenses to be eligible for reimbursement. These services include health expenses applied to plan deductibles, co-insurance, co-payments, and amounts over plan maximums, and other expenses that may not be covered under the employee's health plan.

In order to be eligible, an expense must be incurred by the employee, the employee’s spouse, or eligible Dependent. For the purpose of determining eligible TSB Health expenses, Dependent means an individual that the employee is entitled to claim as an exemption under Section 151(c) of the IRS Code. The IRS does not consider reimbursement of a domestic partner or partner’s child(ren) as eligible expenses, unless the domestic partner or partner’s child(ren) qualifies as an income tax dependent of the employee.

For those employees also enrolled in the HSA, the IRS allows only dental and vision expenses to be reimbursed before the HDHP deductible is met. Once the HDHP deductible is met, all IRS eligible medical, prescription, dental, and vision expenses incurred after that date are reimbursable.

Contributions

Healthcare Expenses

Year-End Provisions

The TSB Healthcare Reimbursement Account has a carryover provision at the end of each plan year.  Plan participants are able to carryover up to $500 of unused TSB Healthcare Reimbursement Account funds into a new account in the following plan year. Carryover provisions are as follows:

When employees have more than $500 remaining in their TSB Healthcare account on December 31st:

IU Benefit debit/Visa Card

The IU Benefit Card is a debit-type Visa card that allows participants to pay for purchases and services from their TSB Healthcare Account, their Health Savings Account, or both.

The IU Benefit card is effective for three years and participants can continue to use the card for that period as long as they enroll in either the TSB Healthcare or HSA each year. New cards are automatically reissued as they expire. The card does not apply to the TSB Dependent Care Reimbursement Account.

For more information about the IU Benefit Card, visit the IU Benefit Card webpage.

Dependent "Day/Evening" Care Reimbursement Account

The Dependent (Day/Evening) Care reimbursement account allows you to set aside tax-free money that is later used to reimburse yourself for daycare expenses of a child (under age 13) or other qualifying  tax dependents in order to allow the employee and spouse to work.

Contact Nyhart or your tax advisor if you have questions about whether specific expenses are eligible.

TSB Dos and Don'ts

 

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Page updated: October 2015
UNIVERSITY HUMAN RESOURCES
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