Transcript 2016 Flex Spend Account Only - Flex Plan PowerPoint for Employees

Flexible
Spending
Plans
Open Enrollment Begin February 1, 2016
A presentation of the
Rock Island County Human Resource Department
Open Enrollment for the
Rock Island County
Flexible Spending Plans
Begins February 1, 2016
and closes February 29, 2016
Important changes are occurring
with length of the plan year
(See slides 28 & 29)
Flexible Spending Plans,
Also Known As…
•
Cafeteria Plans
•
Section 125 Plans
•
FSA Plans
Why should I even be interested in a
“Flexible Spending Plan”?
Because it could save you money!!!
Advantages for Employees
•
No Income Tax is withheld
•
No FICA (Social Security)Taxes are
withheld
•
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 during the
current plan year (unless a Qualifying Event Change of Status occurs) –
• We will address what a “Qualifying Event” is in
a later slide
Disadvantages for Employee
•
Social Security offsets
(may adversely affect
calculation of Social Security
and other benefits at time of
entitlement)
So what is a
“Flexible Spending” Arrangement?
Flexible Spending Arrangement
• A 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.
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.)
Examples of the Most
Common 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.
More Examples of the Most
Common Qualified FSA
Expenses
• Prescription drug co-payments
• 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
• Most over-the-counter medications such as
antacids, cold medicines, pain relievers, and
allergy medication (some may qualify if
prescribed by a physician)
• 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.
More Examples of NonQualifying FSA Expenses
• Health club dues
• Bottled water
• Cosmetic surgery
• Vitamins, herbal supplements,
Retin-A, Rogaine
• Maternity clothing, diaper
service or diapers
• Travel expenses, meals and
lodging
Important
Once your deductions for the plan
year start you cannot stop them
unless there is a “Qualifying
Event”.
Examples of the Most Common
“Qualifying Event”
•
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)
During the year you may be required
to substantiate or prove the validity
of a claim
How do you substantiate or prove
the validity of a claim?
Substantiation of FSA Claims
• By providing 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
• By providing 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
Unacceptable Substantiation of
FSA 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
Frequently Asked Questions
How long is a plan year?
 Prior to 2016, the Rock Island County plan year
has been 12 months long, and was in effect
from March 1st through the last day of
February.
 For 2016, the plan year will be only ten months
in duration – starting on March 1, 2016 and
ending on December 31, 2016
 Beginning on January 1, 2017, the plan year
will return to being 12 months long – starting
January 1st and ending December 31st
Frequently Asked Questions
How much can I have taken out for the 10 months
in 2016?
 $2,125.00 for Flex Spending (Unreimbursed
Medical Expenses)
 $4,166.66 for Dependent
Child Care
Frequently Asked Questions
I have heard that if I do not use all my funds
during the plan year that I lose them!
 No. The Rock Island County plan allows
employees to roll over up to $500 to the next
plan year.
Frequently Asked Questions
Do I have to pay for the medical services
prior to getting reimbursement?
 No. A participant only has to prove that the
medical services were incurred. You do not
have to prove that you paid for the services.
Frequently Asked Questions
How do I gain access to my flex plan money?
 All participants receive a debit card to pay
immediately for eligible medical expenses.
 Non-debit card medical expenses are
reimbursed by check
Is there automatic deposit capability?
No. When the debit card is not
used a reimbursement check
is issued and mailed directly
to the employee.
Frequently Asked Questions
Can claims be submitted by fax?
 Yes, as long as all the required information
needed is sent and the fax is legible.
Frequently Asked Questions
Does employees have access to FSA
claim information on line?
 Yes. This allows employees to view paid
and pending claims as well as check on a
claim or payment status.
Questions
Contact Human Resources
at (309)558-3610