[Flex FAQ] | [Downloadable Section 125 Forms]
Flex Plan Enrollment Kit
Your company is please
to offer this money saving employee benefit plan. It’s called a Flexible
Benefits Plan. There are basically three parts to a “FLEX” plan:
Option
One
The
PREMIUM CONVERSION ACCOUNT allows employees to pay their share of premiums
for health insurance or certain other insurances with pre-tax dollars. |
Option Two
The MEDICAL EXPENSE REIMBURSEMENT ACCOUNT allows employees to pay for medical expenses (not covered by insurance) with pre-tax dollars. Following are typical “out-of –pocket” expenses that would qualify:
You now pay these
“known expenses” with “after-tax” dollars. With
this plan, you can save Federal, State and FICA tax on this money –
effectively giving you a 28% - 43% discount! (depending on your tax
bracket) |
Option Three
The DEPENDENT CARE
EXPENSE REIMBURSEMENT ACCOUNT allows employees to pay for most child/dependent
care expenses with pre-tax dollars. In most cases, there is substantially
more tax savings with this plan than there is with the “tax credit”
that you get when doing your tax return. |
To Enroll you must first: Determine your “Annual Election Amount” (calendar year) for medical and dependent care expenses. Click here for worksheets that will help you to estimate your out of pocket expenses.
Contributions to the plan are made through payroll deduction. The deduction amount is determined by dividing the annual election amount by the number of pay-periods in the plan year. Example: Estimated medical expenses = $480.00 divided by 24 pay-periods equals a $20.00 deduction each payroll into your account.
This deduction
is taken out of each of your paychecks before taxes are taken out. The money
is placed in your own reimbursement account. As soon as you have an “out
of pocket” expense, you will submit a claim directly to MWS-Flex, and
receive a reimbursement from your medical or dependent care account in your
next paycheck.
Guideline # 1 – The entire annual election amount for your Medical Account will be available to you from the very start of the plan. Using the example above, you can be reimbursed for a $250.00 pair of eyeglasses after only one payroll deduction of $20.00. To receive reimbursement
from your dependent care account you must have the money in the account. |
Guideline # 2 – “The Use It or Lose It Rule” – If you do not use up all of the money in your account by the end of the plan year, your balance will be forfeited and cannot be returned to you (IRS regulations). Please estimate your expenses conservatively and be careful to contribute amounts for expenses that you reasonably know you are going to have. Expenses must be
for services rendered during the plan year for which the election is
being made. |
Guideline # 3 – Enrollment – You may only enroll in the plan prior to the beginning of the plan year. You may not change you election after the plan year begins unless you experience a change in family status (marriage, divorce, birth, death, and significant change of employment). For details of these qualifying events please refer to your copy of the Summary Plan Description.
|
Guideline # 4 – Termination – If you leave employment
you will have the following options:
2) Continue Participation under COBRA – by making monthly payments to the plan IF the
balance exceeds the amount required to complete the plan year. |
This summary is intended to highlight the most important features of the plan. In no way is it intended to replace the Summary Plan Description (SPD), which will be provided to each location manager. Please read the SPD carefully.
For your convenience, we have created a worksheet that can be downloaded by clicking this link:
Also, please read MoneyWise Solution's Flex FAQ.
MWS-Flex
Contact: Please direct questions to:
Frank Surface 561-1708
1. WHAT IS A FLEXIBLE BENEFIT PLAN?
A flexible benefits plan allows employees to pay for certain expenses with pre-tax dollars. This saves the employees federal, state and social security taxes on qualifying expenses.
2. WHAT EXPENSES CAN BE PAID THROUGH A FLEXIBLE BENEFITS PLAN?
(1) Any medical expenses not covered by 'insurance for you and
any family members
(2) Dependent care for children up to the age of 13 and for relatives whom you
provide dependent care for
3. WHY WOULD I WANT TO PAY THESE EXPENSES UNDER THE COMPANY'S FLEXIBLE BENEFITS
PLAN?
To save taxes that you currently spend on these expenses.
4. DO I HAVE TO PAY THESE TAXES BACK AT SOME FUTURE TIME?
No! Taxes you save under this program never have to be repaid.
5. DOES PARTICIPATING IN THIS PLAN AFFECT THE FILING OF MY INCOME TAX RETURN
AT YEAR END?
No! Your tax savings are adjusted on your W-2 Form and there is no extra work filing your income tax returns.
6. IF I AM NOT COVERED UNDER THE COMPANY'S HEALTH INSURANCE PLAN, MAY I STILL
PARTICIPATE IN THE FLEXIBLE BENEFITS PLAN?
Yes! It does not matter where you are covered for health insurance. You may
pay for any medical expenses not covered by group insurance for any family member
under this plan.
7. WHAT ARE SOME EXAMPLES OF EXPENSES NOT COVERED BY INSURANCE THAT CAN BE PAID
UNDER THE FLEXIBLE BENEFITS PLAN?
(1) Deductibles and coinsurance amounts that you are responsible for
(2) Dental expenses
(3) Contact lenses or eyeglasses
(4) Eye Exams
(5) Braces for teeth
(6) Prescription drugs not covered by insurance
8. HOW DOES THE PLAN WORK?
You estimate the amount of expenses you expect to have to pay out of your pocket
for the plan year. This estimate is for you and all family members. Worksheets
are provided in the packet to help you determine this amount.
When you have determined this amount, we divide that number by the number of pay periods remaining in the year to give us the amount of money to be withheld each pay period pre-tax. This money is deposited each pay period in a trust account for you to draw off of as you submit claims that you and your family have not been reimbursed for by insurance.
Example:
$480.00 is the amount you have determined that you and your family will incur
for the plan year. We take $480.00 @ 24 (monthly pay periods ) = $20.00 out
of your check and deposit into the trust account. Remember that you do not have
to pay taxes on this $20.00 when it is withheld from your check. The average
tax savings for most employees is 25%. Therefore, you get credit for putting
$20.00 in your reimbursement trust account although your actual reduction in
your paycheck is only $15.00.
9. WHAT DO I DO TO GET MY EXPENSES, NOT COVERED BY INSURANCE, REIMBURSED UNDER
THE PLAN?
You simply complete the one page claim form in the packet and mail to the indicated
address along with your bill or paid receipt and you will be promptly reimbursed
through your regular pay check.
10. CAN I TURN IN CANCELED CHECKS AS A RECEIPT?
No, a receipt must have the date(s) of service, the amount of the expense incurred,
and the providers name.
11. CAN MWS-FLEX SEND MY DEPENDENT CARE REIMBURSEMENT DIRECTLY TO THE PROVIDER
EVERY PAY PERIOD?
No, but the reimbursement can be scheduled for future paychecks with proper
documentation from the provider.
12. WILL MWS-FLEX ACCEPT A WRITTEN REQUEST FOR PAYMENT BY A PROVIDER FOR THE
ENTIRE YEAR?
Yes, MWS-FLEX will take a written request for payment in lieu of a receipt if
the request from the provider states date ranges of service, the amount of expenses
for the entire period, and the amount and frequency of the periodic payments
expected. The request needs to be signed by the provider and the participating
employee. Please call our Richmond office prior to your first deduction to verify
that everything has been set up properly.
13. WILL MWS-FLEX PAY LATE FEES IF THE CHECK DOES NOT ARRIVE IN TIME?
No, we make every effort to ensure timely reimbursement for expenses, but cannot guarantee delivery of your reimbursement at a certain time.
14. HOW LONG WILL IT TAKE TO GET MY MONEY REIMBURSED?
Reimbursements are made as part of the regular pay cycle. If your request is received at least one week before the next paycheck, the reimbursement will be included if it is approved.
15. CAN I BE REIMBURSED FOR MORE MONEY THAN I HAVE HAD TAKEN OUT OF MY PAYCHECK?
(1) Medical Reimbursement Account - Yes! You may claim up to your election amount
at any time during the year regardless of the amount that has been withheld
to date. In other words, if you elect $480 for the year and you incur these
expenses early in the year, you may be reimbursed up to the $480 at any time
during the year. Your weekly amount of contributions to the plan will stay the
same throughout the year so that at year-end your account will be in balance.
(2) Dependent Care Account - No! You may only be reimbursed from this account
up to the amount you have contributed.
16. HOW DO I KEEP TRACK OF MY CONTRIBUTIONS AND AMOUNTS THAT I HAVE BEEN REIMBURSED
AS THE YEAR GOES ON?
Employees will receive reimbursements through payroll checks as well as all
deductions must be done through payroll. The transactions will be tracked on
your paycheck stub each pay cycle. If you have questions on the status of your
account, call MWS-Flex.
17. ONCE I MAKE AN ELECTION FOR THE AMOUNT OF MONEY I WANT TO SET ASIDE FOR
THE YEAR CAN I CHANGE THAT AMOUNT DURING THE YEAR?
If you have a change of status during the year you may 'increase or decrease
your annual election amount. A "Change in Status" change form is included
in this packet. However, if you do not have a change in status during the year
you may not increase or decrease the amount you elected at the beginning of
the year.
18. WHAT HAPPENS IF I DO NOT USE ALL OF THE MONEY THAT I SET ASIDE EACH YEAR?
You must use all of your money that you have set aside for the year or lose
it. Therefore, you should be very conservative when estimating your expenses.
You will receive a monthly statement that will tell you how much money you have
used and the amount you have left in your account.
19. IF I PARTICIPATE IN THE FLEXIBLE BENEFITS PLAN, WILL IT AFFECT CONTRIBUTIONS
TO MY SOCIAL SECURITY ACCOUNT?
Yes. Because you do not have to pay Social Security taxes on the money that
goes into the plan, your contributions to Social Security will be slightly less.
20. IS THERE A DOLLAR LIMIT ON THE AMOUNT OF MONEY THAT CAN BE SET ASIDE FOR
THE DEPENDENT CARE ACCOUNT?
Yes. The maximum amount that you can set aside each year in the dependent care
account is $2,500 for parents filing separately or $5,000 for married couples
filing jointly or single parents.
21. WHEN DO CLAIMS HAVE TO BE INCURRED IN ORDER FOR REIMBURSEMENT CHECKS TO
BE PROCESSED?
Claims have to be incurred in the current plan year in order for you to be reimbursed.
For example: if you 'incurred medical claims 'in Year 1, they cannot be reimbursed
with money you contribute to the plan in Year 2.
22. WHAT HAPPENS IF I QUIT OR I AM TERMINATED FROM THE COMPANY?
Under COBRA law, you can elect to continue coverage of your health insurance,
dental insurance, or flexible spending accounts. If you decide to continue coverage
under COBRA, you can continue in the plan until the end of the plan year.
23. WHAT IF I DO NOT WANT TO ELECT COBRA?
If you do not elect continuation of your flexible benefits under COBRA, then
you are terminated from the flex plan with the effective date of your termination
from the company. You have a specified grace period to submit claims for expenses
that were incurred before your termination date. Please see plan document for
grace period.
Downloadable Section 125 Forms:
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