What is a Flex Benefit Plan?
Flex Benefit Plan
allows a participant to set aside dollars each year, on a
basis, to pay for qualified medical and dependent care expenses and, in some instances, individual insurance premiums. These dollars are deducted from the participant’s paychecks before any income or social security taxes, saving participants roughly 20-30% on dollars that are set aside through the plan. By using this
Flex Benefit Plan
, participants will notice an increase in take home pay and have access to a reimbursement account throughout the year to pay for qualified expenses.
Benefit Options for Flex Benefit Plans
Premiums that are deducted from your paycheck for employer sponsored benefit programs, such as health, vision and dental insurance can be deducted on a pre-tax basis. There are no claims to file.
This is simply handled by your payroll department.
Medical Expense reimbursement accounts allow participants to set aside dollars for qualified out-of-pocket health care expenses, up to a maximum contribution amount set by the employer. Medical expenses include eligible vision and dental expenses.
Dependent Care expense reimbursement accounts allow participants to set aside dollars for children (under age 13) or adult day care so that the participant may work. The IRS sets the annual maximum election amount for the Dependent Care account. The maximum election amount per calendar year is the lesser of: (1) $5000 for married filing joint tax return or $2500 for married filing separately, (2) spouse’s total annual compensation or (3) half of your total annual compensation. If you are single, the maximum amount is $5000.
Individual Premium reimbursement accounts allow participants to set aside dollars for payment of insurance premiums for coverage issued on a non-group, individual basis. Coverage may include health, dental, vision and certain “specialty” coverage such as cancer and/or intensive care insurance policies. Medicare Part B and D, and Medicare supplemental insurance policies are excluded.
Contributions to a Health Savings Account (HSA) may be deducted on a pre-tax basis, prior to deposit with the participant’s HSA trustee. This is only available to participants who are covered by a qualified High Deductible Health Plan (HDHP). The employee, the employer, or both may make contributions to the Health Savings Account. Participants who are making contributions to an HSA are only eligible for a “limited scope” Medical Expense reimbursement account. This means that dollars set aside in the Medical Expense reimbursement account can only be used for eligible dental and vision expenses.
Claims Reimbursement Options
Participants in any of the reimbursement accounts can choose to have their claims reimbursements made by either direct deposit or check. We would recommend the additional security of direct deposit of claim payments.
Participants can mail, fax or e-mail a claim form along with supporting verification (Explanation of Benefits from insurance provider, bill from medical provider, invoice, or other proof of service) for qualified expenses incurred.
Region I processes claims daily and generally issues claim payments on Thursday of each week. If a claim is received on Wednesday, the reimbursement is typically issued the next business day.
The IRS requires that Flex Benefit Plan participants only use elections for services or purchases made during the plan year and grace period (if offered). All unspent dollars at the end of the plan year will be forfeited back to the employer. This is referred to as the “Use it or lose it” rule. Flex Benefit Plan participants are required to keep a copy of their completed claim forms, as well as verification of all eligible purchases made with their elections.
Copyright 2009 by Region 1