Highlights

Flexible Spending Accounts let you pay certain health and dependent day care expenses with tax-free dollars. Because you don't pay taxes on these dollars, they buy more services - and the services actually cost you less.

Through payroll deductions, Flexible Spending Accounts work somewhat like a personal bank account. You can set aside money to cover eligible health care and dependent day care expenses. The money comes out of each paycheck - before taxes - and is deposited in a special account. Although Flexible Spending Accounts do not pay interest on your money, you can withdraw money from the account to reimburse yourself for eligible expenses.

WHAT ARE MY OPTIONS?

Vought Aircraft offers two types of Flexible Spending Accounts:

The Health Care Flexible Spending Account
The Dependent Day Care Flexible Spending Account

You can enroll in one or both accounts when you are hired, within 60 days of a qualified change in status, or during the Annual Enrollment period. You also can choose not to participate.

A WORD OF CAUTION... PLAN YOUR EXPENSES

Before you enroll in a Flexible Spending Account, you should carefully estimate your health care and dependent day care expenses for the year. Your estimates are important because in exchange for the tax savings you receive, the Internal Revenue Service places several restrictions on the money you contribute.

This chapter includes tips to help you estimate your expenses. If you plan ahead, you can save money on eligible expenses through the before-tax feature of Flexible Spending Accounts.

What is a qualified change in status?

A qualified change in status is a life event such as marriage, divorce, legal separation, birth of a child, adoption of a child, death, or change in your or your spouse's employment status.