A Flexible Benefits Plan
Helps your paycheck buy more!
A Flexible Benefits Plan, sometimes
referred to as a Cafeteria Plan, Flex
Plan, or a Section 125 Plan, lets you
set aside a certain amount of your
paycheck into an account before
paying income taxes. During the
year, you have access to this account
for reimbursement of expenses, such
as healthcare and dependent
daycare.
Reimbursable expenses can include:
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Deductibles, Co-pays, and Prescription Drugs
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Expenses not Covered by Insurance
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Dental Services & Orthodontics
?
Eyeglasses, Contacts, Solutions & Eye Surgery
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Adult & Child Care Services
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And More!
When you use tax-free dollars to pay for these expenses,
you realize an increase in your spending power and
substantial tax savings.
Here’s how it works…
Example: An employee makes $2,000 each month and decides to participate in his/her employer’s
Flexible Benefits Plan. As a result, his/her insurance premiums and health and daycare expenses
are paid with tax-free dollars, giving him/her an additional $100 each month!
Without the Plan
With the Plan
Gross Earnings
$ 2,000
Gross Earnings
$ 2,000
FICA, Federal, State Taxes
- $ 500
Insurance Premium
- $100
Insurance Premium
- $ 100
Health and Day Care Expenses
- $300
Health and Day Care Expenses
- $ 300
Adjusted Gross Earnings
$ 1,600
FICA, Federal, State Taxes
- $400
NET EARNINGS
$ 1,100
NET EARNINGS
$ 1,200
It’s as easy as…
1
Carefully read this
material and choose
which options make
sense for you.
2
Determine how
much you expect to
spend during the
year for each option.
3
Complete the Election
Form and return it to
your Human Resources
Department.
Step
There are three
1:
Fl
Your
exible Benefits
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Options
Plan
accounts in which you
can participate.
1. Healthcare Reimbursement Account
This account reimburses you for healthcare expenses not
covered by insurance. You set aside money, tax-free, through
regular payroll deductions. During the year, you can be
reimbursed directly from your account for those qualified
healthcare services if those services are not covered by
insurance.
Common expenses that qualify for reimbursement are: doctor
visits, deductibles, co-payments, prescriptions, mental health
care, dental services and orthodontics, chiropractor services,
eye exams, glasses and contacts.
2. Dependent Care Reimbursement Account
This account reimburses you for daycare expenses for eligible
children and adults. Through regular payroll deductions, you
can set aside part of your income to pay for these expenses on
a tax-free basis.
To qualify, your dependents must be:
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a child under the age of 13, or;
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a child, spouse or other dependent who is physically or
mentally incapable of self-care and spends at least 8 hours
a day in your household.
Qualified expenses for reimbursement include: adult and child
daycare centers, preschool and before/after school care.
3. Premium Savings Account
This account allows you to pay for your employer-provided
health and other insurance premiums with tax-free dollars.
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Step
By completing
2:
the
Determine
following information, you
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Your
can calculate
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Reimbursable
your annual reimbursable expenses.
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Expenses
Take into consideration the services to
be provided during the upcoming plan year for you and your dependents.
Healthcare Expenses
Medical (1)
Vision (2)
Dental (3)
Deductibles
$
Exams
$
Routine Check-ups
$
Co-payments
$
Eye Surgery
$
Fillings/Crowns
$
Doctor Visits
$
Lenses/Frames
$
Orthodontics
$
Prescriptions
$
Contacts/Solutions
$
Other
$
Other
$
Other
$
Total (1)
$
Total (2)
$
Total (3)
$
Dependent Daycare Expenses
Estimated Annual Expenses
Children
$
Total Healthcare Expenses (
Add total (1) Medical + total (2) Vision + total
(3) Dental.)
$
Adults
$
Total Dependent Daycare Expenses
(Total 4)
$
Total (4)
$
Total Expenses
(Add total Healthcare expenses + Total Dependent
Daycare expenses.)
$
Wage Deferral
The amount of money you wish to set aside in the reimbursement account is
not subject to any taxes at any time.
Social Security
7.65%
State Taxes
0-6%
Federal Taxes
0-28%
Step
Using the infor
3:
mation
Complete
you calculated in Step
the
2, complete
Election
the Election Form
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Form
and return it to your Human Resources Department.
Eligible Expenses
Health Care Reimbursement Account
The IRS allows the following expenses to be reimbursed under the Dependent Care Reimbursement Account. Dependent
care expenses must be incurred to allow the employee and/or their spouse to be employed outside of the home.
This list
is not inclusive.
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Acupuncture
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Ambulance Hire
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Anesthetist
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Artificial Limbs and Teeth
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Automobile Modifications (hand controls, special
equipment, mechanical lifts)
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Blood Donor
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Braille Books and Magazines
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Chiropractic Services
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Contact Lenses, Saline Solution, Enzyme Cleaner
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Contraceptives (prescribed only)
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Deductible, Coinsurance, Co-payment
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Dental Services (dentures, crowns, bridges, fillings,
braces, oral surgery, extractions)
?
Drugs (legal - prescription only or insulin)
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Elastic Hose (medically prescribed)
?
Examination, Physical (non-employment related)
?
Eye Examination
?
Eyeglasses and Sunglasses (prescription)
?
Fertility Expenses
?
Guide Dog
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Halfway House Residency
?
Healing Services
?
Hearing Devices/Batteries
?
Laetrile (when prescribed by a doctor)
?
Lamaze Class (mother-to-be only)
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Lifetime Care at a Medical Facility
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Lip Reading Lessons for the Deaf
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Midwife
?
Orthopedic Shoes, Custom Molded Arch Supports
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Over-the-Counter Medications/Supplies (i.e., cold
medicines, pain relievers, allergy medications, etc..)
?
Oxygen Equipment
?
Pre-existing Condition Expense (medical)
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Patterning Exercises
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Physical Therapy
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Prosthesis, Splints, Casts, Crutches
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Psychiatric Care
?
Radial Keratotomy/Laser Eye Surgery
?
Rental of Medical or Healing Equipment
?
Retirement Home Fees (portion allocable to medical
care)
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Sanitarium or Rest Home
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Sex Therapist
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Smoking Cessation Program
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Special TV Set to Receive Closed Caption
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Speech Therapy
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Sterilization
?
Support Devices (including special mattress and
board for arthritis)
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Telephone for the Deaf
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Transportation Expenses Related to Illness
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Vaccinations/Immunizations
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Wigs (hair loss due to disease)
Eligible Expenses
Dependent Care Reimbursement Account
The IRS allows the following expenses to be reimbursed under the Dependent Care Reimbursement Account. Dependent
care expenses must be incurred to allow the employee and/or their spouse to be employed outside of the home.
This list
is not inclusive.
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Before and after school care for a dependent under age 13 that lives with you.
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Day care facility fees for a dependent under age 13 that lives with you.
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In-home baby-sitting fees (must be claimed by care provider) for a dependent under age 13 who lives with you.
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Local day camp for a dependent under age 13 who lives with you.
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Care of a dependent who lives with you and is physically or mentally incapable of caring for himself.
Ineligible Expenses
Health Care Reimbursement Account
The IRS does not allow the following expenses to be reimbursed under the Health Care Reimbursement Account.
This
list is not inclusive.
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Breast Pumps
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Canceled Appointment Fees
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Contact Lens Insurance
?
Cosmetic Surgery/Procedures (i.e., electrolysis, hair transplants, liposuction, face lift operations)
?
Diaper Service
?
Discounts/Write-offs/Late Payment Fees
?
Exercise Equipment*
?
Hair Loss Medication
?
Health Club Dues*
?
Herbs & Herbal Medicines
?
Insurance Premiums (Group or Individual)
?
Marriage Counseling
?
Massage Therapy**
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Maternity Clothes
?
Retin A*
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Rogaine*
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Sonic Toothbrushes
?
Special Foods (not for nutritional purposes)
?
Teeth Bleaching
?
Toiletries (deodorant, toothpaste)
?
Viagra*
?
Vitamins/Nutritional Supplements
?
Weight Loss Program*
*Eligible only with a physician’s certification identifying the medical condition and length of treatment program. Retin A is
reimbursable when prescribed by a physician for the treatment of acne, but not wrinkles.
**Eligible only with a physician’s certification identifying the physical nature of the medical condition and length of
treatment program. Massage therapy for the sole purpose of tension or stress relief does not qualify as an eligible
expense.
Ineligible Expenses
Dependent Care Reimbursement Account
The IRS does not allow the following expenses to be reimbursed under the Dependent Care Reimbursement Account.
This list is not inclusive.
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Clothing
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Entertainment Expenses
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Evening Baby-sitting
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Field Trips
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Kindergarten Tuition
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Late Fees
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Lesson Fees (i.e., dance, piano)
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Lunches/Snacks
?
Over Night Day Camp
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Transportation
Questions & Answers
What is a Flexible Benefits Plan?
A benefit provided by your employer that lets you set aside a
certain amount of your paycheck into an account before paying
income taxes. Then, during the year you can be directly
reimbursed from your account for qualified healthcare and
daycare expenses.
Why should I participate in the Healthcare
Reimbursement Account when I already have health
insurance?
This account is used to pay for expenses not covered by
insurance. For example – annual physicals, co-payments, eye
exams, glasses, orthodontics, prescription drugs, and hospital
care to name a few.
If I set aside part of my pay, won’t I make less
money?
No. Your net take-home pay will increase by the amount of
taxes you did not pay. An example of how it may work for you
is detailed on the inside of this brochure.
Can I change my contributions during the year?
Only if you have a change in status such as: marriage, birth,
adoption, or a change in your, your spouse’s, or your
dependent’s employment status.
How does the Dependent Care Reimbursement
Account differ from the federal tax credit?
The Dependent Care Plan reduces your taxable income. The
dependent care tax credit reduces the already calculated tax
liability. A tax advisor can help you determine which method is
more advantageous to you. Keep in mind that you cannot
claim the same expenses under both the Dependent Care Plan
and the tax credit. Your available tax credit will be reduced
dollar for dollar by any amount you claim from a Dependent
Care Plan.
How do I get reimbursed for my expenses?
All requests for which insurance benefits are available must
include the Explanation of Benefits (EOB) form from the
insurance carrier(s) along with a signed Flex Claim Form. If
you have other insurance through your spouse, you must
attach EOB’s from
both
insurance carriers. You may submit
an itemized bill from the provider of service for charges
incurred for which no insurance benefits are available.
Balance forward statements and canceled checks are not
acceptable for tax purposes and therefore cannot be used for
flex reimbursement.
All dependent care reimbursement
requests must include a completed and signed Flex Claim
Form and a signed receipt from your daycare provider. The
receipt must include the dependent name(s), date of service,
name, address, taxpayer identification number, and dollar
amount charged.
Will the plan reimburse for future or anticipated
expenses?
No. Charges must be incurred and processed through any and
all available insurance benefits before you may be reimbursed
from your flex account.
What is automatic crossover of claims?
The automatic cross-over feature allows participants with no
other form of medical, dental or vision coverage for themselves
or any of their dependents, to elect to have their Healthcare
Reimbursement claims automatically reimbursed by their Flex
account after their claims have been processed by the DEW
Benefit Analyst. If you or your children are also insured
through your spouse, you may not elect automatic crossover.
When automatic crossover is elected, deductible, coinsurance
and most ineligible amounts will crossover to Flex.
Do I have to wait for the money to be deposited in
my account in order to make a claim for
reimbursement?
The annual amount you have allocated for the Healthcare
Reimbursement Account is available to you at any time
throughout the plan year. The amount available to you from
your Dependent Care Reimbursement Account is the amount
you have contributed to date.
How will I know how much money I have left in my
account?
You will receive a statement at the end of each quarter
notifying you of the amount remaining in your account.
Additionally, an Employee Payment Report will be attached to
each reimbursement check which will summarize your
remaining benefit.
Can I transfer money from the Health Care
Reimbursement Account to the Dependent Care
Reimbursement Account or vice-versa?
No. The IRS rules that govern these accounts will not allow
you to transfer money from one account to another.
What if I don’t use all of the money I set aside in my
accounts?
Carefully review your estimated expenses before making the
decision to participate. Per IRS rules, any contributions that
are not used during the plan year will not be paid to you and
they cannot be used in a later plan year.
What happens if I terminate my employment?
You will be able to request reimbursement for healthcare and
daycare expenses for services provided prior to your
termination.
Note: The Flex Master Plan Document determines the exact benefits and requirements of the Flexible Benefits Plan.
111 E. Ludwig Road, Suite 108 * Fort Wayne, IN 46825
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Through a Flexible Benefits Plan
