Flexible Benefits Plan (Also known as Section 125 or FLEX):  Pre-tax plan that allows you to reduce your taxes and increase your take-home pay when you contribute toward group health plan premiums, a medical reimbursement account or a dependent reimbursement account.

 - Pre-tax Premium Plan:  Without this plan, your health premium contributions are paid with "after-tax dollars."  This means that Federal and State income taxes and FICA (Social Security) taxes are calculated on your pay before your share of the premiums are deducted.  By using this plan, your premium contributions will be deducted instead on a pre-tax basis resulting in less taxes taken out of your paycheck and more take-home pay.

 - Medical Reimbursement Plan:  Under this plan, a separate medical reimbursement account is set up for you.  A portion of your income is set aside on a pre-tax basis.  The account is used to reimburse your out-of-pocket health care expenses.  You decide on the amount to put in your account.  You do not need to participate in the health plan to use the medical reimbursement plan.

 - Dependent Care Reimbursement Plan:  Under this plan, you establish a dependent care reimbursement account using pre-tax dollars.  This account may be used for paid care for children under the age of 13, a child who is totally disabled, or an adult who resides with you at least eight hours a day.  Both you and your spouse must be gainfully employed, one is a full-time student or disabled (if married).  There are additional eligibility requirements for legally separated or divorced parents.

Eligibility:  The plan is available for full-time employees. 

Maximums:  There are no maximums on the amount you can tax shelter for medical reimbursement.  The maximum for child care is $5,000 per year ($2,500 if married filing separate return).

Changing Your Elections:  Because of the tax savings you receive under the pre-tax plan, you cannot change your election before the next open enrollment period unless you have a qualified status change event.  Examples of status changes include marriage, divorce, legal separation, death of family member, birth / adoption, change in employment status, etc.  (Changes must be made within 30 days).  For more information, please contact the Office of Human Resources.

FAQ:  

• Can I use the pre-tax premium plan during the year, then itemize my health premium contributions on my tax return?  No - The IRS will not allow you to "double dip" on medical expenses.
  
  
• Since the plan reduces my W-2 earnings, will it also reduce my Social Security benefits in the future?  Yes - however this usually causes just a slight reduction in Social Security benefits.
  
  
• If I don't use all of the money I set aside for medical reimbursement, will I lose it?  Yes - must use spend all of the funds on medically related expenses, then file for reimbursement to take full advantage of the plan.
  
  
• Can I use the medical reimbursement account to cover the expenses for over-the-counter drugs?  These expenses are eligible if they treat a specific medical condition and are not just used for a persons general good health.  For example, allergy or cold medications are eligible but toothpaste and mouthwash are not.
  
  
• I'd like to have eye surgery in January.  Can I use all of the funds I set aside for medical reimbursement that early in the year?  Yes - you will be reimbursed for up to the maximum amount you elect.
  
  
• Can I pay for insurance premiums through my medical reimbursement plan?  No, you cannot pay for insurance premiums with this plan, even if the premiums are not payroll deducted.

For more information, please contact the Office of Human Resources.  Handouts and worksheets are available in HR.