Transcript Enrollment
Flexible
Spending
Plans
Flexible Spending Plans,
Also Known As…
•
Cafeteria Plans
•
Section 125 Plans
•
FSA Plans
Types of Cafeteria Plans
•
Health Flexible Spending Arrangements
(FSAs)
•
Dependent Care
Assistant Plan
(DCAPs)
Health Flexible Spending
Arrangement
• A health flexible spending arrangement is an
individual account funded by employee salary
reduction on a pre-tax basis.
• Amounts placed in such an account are used
exclusively to reimburse the
employee for qualified
unreimbursed medical
expenses incurred by the
employee, spouse and/or
dependents during the plan
year.
Health Flexible Spending
Arrangement
• Elected funds are available on first day
of plan. (You can receive the full
amount of elected funds prior to full
payroll deduction for the plan year.)
Dependent Care Assistant Plan
•
A dependent care assistant plan is an
individual account funded by employee
salary reduction on a pre-tax basis.
•
Amounts placed in such an account are
used exclusively to reimburse the employee
for employment-related
dependent care that
would be eligible for the
dependent care tax
credit with the IRS.
Dependent Care Assistant Plan
•
Funds are available as funds are withdrawn
from payroll check. (You can only take out
what you have put in to date from your payroll
deductions.)
Examples of Qualified FSA
Expenses
• Medical, dental & vision expenses not
covered under any other plan.
• Co-payments and deductibles
that you are responsible for
under your primary medical,
dental or vision plan or under
any other medical, dental or
vision plan.
Examples of Qualified FSA
Expenses
• Prescription drug co-payments as well as most
over-the-counter medications such as antacids,
cold medicines, pain relievers, and allergy
medication
• Eye exams, eyeglasses, contact
lenses & other vision expenses
(i.e., Lasik eye surgery)
• Orthodontic expenses
• And the list goes on…
Examples of Non-qualifying
FSA Expenses
• Dietary Supplements, toiletries, cosmetics and
sundry items (even if prescribed by a
physician)
• Health insurance premiums that
you or your spouse pays
for coverage under another
health plan.
• Health club dues
• Bottled water
Examples of Non-qualifying
FSA Expenses
• Cosmetic surgery
• Vitamins, herbal supplements, Retin-A,
Rogaine
• Maternity clothing, diaper
service or diapers
• Travel expenses, meals and
lodging
Qualifying DCAP Expenses &
Requirements
• Expenses are incurred for the care of a
qualifying dependent so you (and your spouse,
if applicable) can work or look
for work.
Qualifying DCAP Expenses &
Requirements
• The person being cared for is your dependent
as defined by federal tax laws.
• The person who provided the
care is not your spouse or a
person whom you claim as a
tax dependent.
Advantages for Employee
•
No Income Tax
•
No FICA or FUTA Tax
•
State and Local Taxes (if applicable)
•
Benefits purchased with
pre-taxed dollars in lieu
of after-tax dollars
Example of Tax Savings
John Doe has twin daughters. The twins are
going to be getting braces on next year so he
enrolls in the Flexible Benefits Plan. He elects to
have $1,200 come out of his paycheck on a pretax basis. John earns $35,000 and his wife (a
stay-at-home mom) earns no income. They file a
joint return.
The following chart will
illustrate the tax savings for
John Doe is approximately
$362.00.
Example of Tax Savings
w/ Cafeteria Plan
w/o Cafeteria Plan
1. Adjusted Gross Income
$35,000
$35,000
2. FSA Election
$ 1,200
$
3. W-2 Gross Wages
$33,800
$35,000
4. Standard Deduction
($ 7,600)
($ 7,600)
($ 11,600)
($ 11,600)
$14,600
$15,800
5. Exemptions
6. Taxable Income
0
Example of Tax Savings
w/ Cafeteria Plan
w/o Cafeteria Plan
7. W-2 Gross Wages
$33,800
$35,000
8. Federal Income Tax
(Taxable income x tax
schedule)
($7,605)
($7,875)
9. FICA Tax
(7.65% of W-2 gross
wages)
($ 2,586)
($ 2,678)
10. After-tax Expenditures
11. Take-home Pay
$
0
$23,609
($ 1,200)
$23,247
Disadvantages for Employee
•
Irrevocability of Election (unless Qualifying
Change of Status occurs)
•
Use-It-or-Lose-It Rule (no roll-over)
Disadvantages for Employee
•
DCAP vs. Tax Credit ($30,000 combined
income - tax credit may be more beneficial than
DCAP)
•
Social Security offsets
(may adversely affect
calculation of Social Security
and other benefits at time of
entitlement)
Examples of Change in Status
•
Change in your legal marital status
•
Change in the number of your tax
dependents
•
Change in employment status of
employee or spouse
(must affect eligibility)
Examples of Change in Status
•
Your tax dependent satisfies (or ceases
to satisfy) an eligibility requirement for a
particular benefit plan
•
Change in residency (must affect
eligibility)
•
Change in day care
providers
Substantiation of FSA Claims
• A bill or receipt from a physician,
dentist, pharmacy, or other supplier which
includes the following information
–
–
–
–
–
Date of Service
Name of Patient
Provider Name & Address
Type of Service
Amount patient is responsible
for paying
Substantiation of FSA Claims
• An Explanation of Benefits (EOB) statement
indicating the deductible, co-insurance and
amounts not covered by any medical, dental
and/or vision plan under which the employee
or any eligible dependent are covered.
Substantiation of FSA Claims
• Store receipts are acceptable ONLY for
hearing aid batteries, contact solution and
eligible over-the-counter medications. The
receipt must have the following information
printed on the receipt:
–
–
–
–
Store Name
Date of Purchase
Product Name
Amount of Product
Substantiation of DCAP Claims
• A bill or receipt from a child care provider
which includes the following information:
– Date(s) of Service
– Name of Dependent
– Child Care Provider name,
address and phone number
– Amount or Charge
– Tax ID Number or Social
Security Number of provider
Unacceptable Substantiation of
FSA & DCAP Claims
• Cancelled checks and credit/debit card
receipts are NOT acceptable forms of claims
substantiation. No reimbursements will be
made on these types of receipts unless it is
accompanied by one of
the above required
documentation.
Frequently Asked Questions
What is the frequency of reimbursements?
Bi-Weekly.
Do you have automatic deposit capabilities?
No. A reimbursement
check is issued and
mailed directly to the
employee.
Frequently Asked Questions
Do I have to pay for the services prior to
getting reimbursement?
No. A participant only has to prove that the
services were incurred. You do not have to
prove that you paid for
the services.
Frequently Asked Questions
What are your customer service hours?
Monday through Friday, 8:30 a.m. to 5:00 p.m.
Eastern Standard Time.
Do you offer a toll-free customer service #?
Yes, the toll free number
is 800-297-1829. This
number as well as our
address and fax number is
indicated on all the
reimbursement forms.
Frequently Asked Questions
Will you accept fax claims?
Yes, as long as all the required
information needed is sent and the fax
is legible. Our fax # is 740-522-7483.
Frequently Asked Questions
Will we have access to our FSA claim
information on line?
Yes, by logging onto www.medben.com
and entering the “online services” This will
allow you to view your
paid and pending claims
as well as check on a
claim or payment status.
Questions