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Section 125 PlanSection 125 PlanFlexible BenefitFlexible Benefit
Please click into the section you’d like to view:Please click into the section you’d like to view:
1. 1. Flexible Benefit Plan Overview 2. 2. Pre-Tax Group Insurance Premiums3. 3. Dependent Care Reimbursement Account4. 4. Medical Reimbursement Account5. 5. How to File a Claim
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Section 125 PlanSection 125 PlanFlexible Benefit PlanFlexible Benefit Plan
OverviewOverview
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The intent of this slide presentation is to provide a brief overview of the Flexible Benefit Plan (Flex Plan).
Please see your employer’s Plan Document for details of the Flex Plan rules and regulations before participating in the program.
What is a Flexible Benefit Plan?What is a Flexible Benefit Plan?
What is a Flexible Benefit Plan?
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Welcome to an overview of the Section 125 Flexible Benefit Plan
(Flex Plan)!
Flex Plans are an excellent way to increase your spendable income and reduce your federal and FICA taxes (and in most states, your state income taxes).
Diversified Benefit Services, Inc. (DBS) is the third party administrator of your employer’s Flex Plan. DBS is located in Hartland, Wisconsin and has administered these plans since 1987.
What is a Flexible Benefit Plan?What is a Flexible Benefit Plan?
What is a Flexible Benefit Plan?
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It’s a tax reduction plan for employees!
Legislation creating these plans was enacted by Congress in 1978.
The regulations are recorded in Section 125 of the IRS Code.
What is a Flexible Benefit Plan?
What is a Flexible Benefit Plan?What is a Flexible Benefit Plan?
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Under Section 125 of the IRS Code, you as an employee, can pay for qualified expenses using money from your paycheck that is deducted pre-tax.
By using pre-tax dollars, you reduce the amount youpay in taxes!
What is a Flexible Benefit Plan?
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What is a Flexible Benefit Plan?What is a Flexible Benefit Plan?
What can a Flex Plan do for you?What can a Flex Plan do for you?
By eliminating Federal and FICA tax (and possibly state tax) on qualifying expenses, the plan saves the average participant approximately 15%-30% in taxes on those expenses.
It can increase the amount of your paycheck that you get to keep!
What is a Flexible Benefit Plan?
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There are three main categories of expenses that qualify for pretax reimbursement.
Group Insurance PremiumsDependent Care Reimbursement AccountMedical Reimbursement Account
The details of these categories are described in the other presentations on this website.
The Benefit CategoriesThe Benefit Categories
What is a Flexible Benefit Plan?
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You earn what is called
“gross pay”. This refers to the amount your employer pays you.
However, this is not what most people get to spend from their paycheck. Why?
Because the government takes a percentage of your “gross pay” first (in the form of taxes).
What does “pre-tax” mean?What does “pre-tax” mean?
What is a Flexible Benefit Plan?
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With the Flex Plan, the government allows you to set aside a portion of your “gross pay” to cover certain expenses before a percentage of it is deducted in taxes.
The remainder of your paycheck is what the government declares subject to taxes.
By deducting pre-tax monies, you pay less in taxes!
The chart on the next slide illustrates this concept.
What is a Flexible Benefit Plan?
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What does “pre-tax” mean?What does “pre-tax” mean?
Paycheck ComparisonPaycheck Comparison
I. Insurance Premiums
II. Dependent Care
III. Medical, Dental, Vision expense
*(Total of I, II, III = $268)
What is a Flexible Benefit Plan?
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Does the Flex Plan affect my Social Security Does the Flex Plan affect my Social Security retirement benefits?retirement benefits?
The Flex Plan may affect your Social Security retirement benefit as you are lowering the amount of your income from which you contribute Social Security taxes.
For most people, the effect is minimal.
Visit the Social Security Administration website at www.ssa.gov if you have questions on how to calculate retirement benefits.
What is a Flexible Benefit Plan?
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Expenses must be incurred in the Plan YearExpenses must be incurred in the Plan Year
The Plan Year is the time frame your employer’s plan is administered.
It is important that any expenses you submit for reimbursement are incurred within the Plan Year.
This means the dates of service (when the service was rendered) must fall within the Plan Year.
What is a Flexible Benefit Plan?
In Summary:In Summary:
Flex Plans are a great way to increase your take home pay.
Please review the other presentations to learn more about the plan.
Ask your employer how you can enroll in the plan and start reducing your taxes!
What is a Flexible Benefit Plan?
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www.dbsbenefits.com
Diversified Benefit Services, Inc. Customer Service Representatives
are available Monday – Friday 8:30 a.m. – 5:00 p.m. (CST)
1- (800)-234-1229 1- (262)-367-3300
Additional questions?Additional questions?
What is a Flexible Benefit Plan?
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Section 125 PlanPre-tax Premium Overview
For Employer Sponsored Group Insurance Premiums
Pre-Tax Premium
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The intent of this slide presentation is to provide a brief overview of the Pre-tax Premium area of the Section 125 Flexible Benefit Plan (Flex Plan).
Please see your employer’s Plan Document for details of the Flex Plan rules and regulations before participating in the program.
What is a Flexible Benefit Plan?What is a Flexible Benefit Plan?
Pre-Tax Premium
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I. Group Insurance PremiumsI. Group Insurance Premiums
This will be done automatically by your employer through regular payroll deductions.
Under the Section 125 Plan, group insurance premiums you pay from your paycheck through your employer for health (or other qualified group insurance premiums) may be deducted from your paycheck with pre-tax dollars.
Under
Pre-Tax Premium
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I. Group Insurance PremiumsI. Group Insurance Premiums
Your insurance contributions are sent by your employer to the insurance company on your behalf.
By paying for your group insurance premiums pre-tax, you save approximately 15%-30% in taxes.
The chart on the next slide illustrates this concept.
Pre-Tax Premium
Pre-tax IllustrationPre-tax Illustration
Pre-tax After-tax
Gross Pay: $1,000 $1,000
Pre-tax Group Insurance: - 100 - 0
Taxable Income: $ 900 $1,000
Taxes (assume 25%) - 225 - 250
$ 675 $ 750
After-tax Group Insurance: 0 - 100
Take Home Pay: $ 675 $ 650
Increased Take Home Pay: $ 25
Pre-Tax Premium
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I. Group Insurance PremiumsI. Group Insurance Premiums
With this area of the Section 125 Plan, there is nothing you need to do.
There are no forms to complete. The monies will not show up on your W-2 form as taxable
income.
Pre-Tax Premium
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www.dbsbenefits.com
Diversified Benefit Services, Inc. Customer Representatives
are available Monday – Friday 8:30 a.m. – 5:00 p.m. (CST)
1- (800)-234-1229 1- (262)-367-3300
Pre-Tax Premium
Additional questions?Additional questions?
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Section 125 PlanDependent Care
Reimbursement Account
Dependent Care
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The intent of this slide presentation is to provide a brief overview of
the Dependent Care Reimbursement Account area of the Section
125 Flexible Benefit Plan (Flex Plan).
Please see your employer’s Plan Document for details of the Flex
Plan rules and regulations before participating in the program.
What is a Dependent Care Reimbursement Account?What is a Dependent Care Reimbursement Account?
Dependent Care
Dependent Care Reimbursement Account (DCRA)Dependent Care Reimbursement Account (DCRA)
This category allows you to pay for qualified dependent care expenses for dependents on a pre-tax basis.
The monies are reimbursed to you after you submit a claim validating your expense showing services have been performed.
By using the account, you save approximately 15-30% in taxes on your expenses!
With the DCRA, you set aside a conservative amount of monies pre-tax for your dependent care expenses.
Dependent Care
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Dependent Care Reimbursement Account (DCRA)Dependent Care Reimbursement Account (DCRA)
The services must be performed within the program Plan Year to qualify.
You must report the care providers Federal Tax Identification or Social Security number on your tax returns in order to use this category.
Dependent Care
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Who is a Qualified Dependent?Who is a Qualified Dependent?
A dependent on your Federal income taxes for the year in which you are filing for reimbursement under the plan and;
A dependent under the age of 13 who you can claim as an exemption or your spouse, parent or child who is unable physically or mentally to care for himself/herself and;
A dependent that spends at least eight hours per day at your residence and lives at your residence at least 6 months of the year.
Dependent Care
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To qualify, the care must be for services that allow you (and your spouse, if you’re married) to be gainfully employed or to attend college on a full-time basis or seek employment during the hours your dependent is with the care provider.
Dependent Care Reimbursement AccountDependent Care Reimbursement Account
Dependent Care
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If you are single (or married & filing a joint Federal tax return), you may contribute up to $5,000 (not to exceed $5,000 in any given calendar year per family). You are limited to the amount of your annual earnings if you or your spouse earns less than $5,000 in a calendar year.
If you are married but filing separate tax returns you are limited to the lesser of $2,500 or your earned income.
What is the Maximum I Can Contribute?What is the Maximum I Can Contribute?
Dependent Care
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If you or your spouse are a full-time student, not working, and have one child in daycare, you may contribute $3,000.
If you or your spouse are a full-time student, not working, and have two or more children in daycare, you may contribute $5,000.
The maximums listed in the previous slides are per family maximums not to be exceeded in any given calendar year.
What is the Maximum I Can Contribute?What is the Maximum I Can Contribute?
Dependent Care
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How does the DCRA work?How does the DCRA work?
Estimate your cost during the Plan Year.
The maximum annual per family deduction allowed by IRS in most cases is $5,000.
Authorize your employer to deduct this amount from your paycheck in equal installments throughout the Plan Year.
Submit claims to DBS for reimbursement as you incur expenses.
Dependent Care
How does the DCRA work?How does the DCRA work?
DBS reviews your claim and reimburses you directly for your expenses.
With dependent care expenses, you can only be reimbursed the dollar amounts that have been deducted from your paycheck as of the date of your claim.
Always submit the total amount of dependent care expenses incurred (even if you have not had that much deducted from your paycheck).
Dependent Care
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How does the DCRA work?How does the DCRA work?
The excess amount claimed will be entered into a “pending account”.
The “pending” amounts will be reimbursed after your payroll deductions are credited to your account.
Dependent Care
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Dependent Care Reimbursement AccountDependent Care Reimbursement Account
An alternative way to save on dependent care expenses is by taking a tax credit when you file your income tax return.
The tax credit is based on your adjusted gross income. As your income goes up, the percent of credit you receive on your expenses goes down.
You should ask your tax advisor which method is best for you. DBS does not provide tax advice.
You may not use the same expenses for both the Flex Plan and the Tax Credit.
Dependent Care
You must file Federal Tax Form 2441 with your income taxes if you participate in the DCRA.
Dependent Care Reimbursement AccountDependent Care Reimbursement Account
Dependent Care
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Important NoteImportant Note
The Dependent Care Reimbursement Account and the Medical Reimbursement Account are separate categories.
!! Pre-tax dollars from one account may not be used for expenses
in the other account.
Dependent Care
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What happens if I don’t use all my DCRA money?What happens if I don’t use all my DCRA money?
By Federal law, unused monies are forfeited at the end of the Plan Year’s run-out period.
Because of this rule, you need to plan conservatively.
For most people, it is easy to estimate the amount for the DCRA as they spend the same amount each week on dependent care.
Note: Most people do not leave any money in this account.
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Dependent Care
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In Summary
The DCRA is an excellent way to reduce your taxes.
Consult your tax advisor to see if this account can benefit you.
Please review the other presentations to learn more about the plan. Ask your employer how you can enroll in the plan and start reducing
your taxes!
Dependent Care
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www.dbsbenefits.com
Claim forms may be downloaded from our website.
Diversified Benefit Services, Inc. Customer Service Representatives
are available Monday – Friday 8:30 a.m. – 5:00 p.m. (CST)
1- (800)-234-1229 1- (262)-367-3300
Dependent Care
Additional questions?Additional questions?
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Section 125 PlanMedical
Reimbursement Account
Medical Reimbursement Account
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The intent of this slide presentation is to provide a brief overview of the Medical Reimbursement Account area of the Section 125 Flexible Benefit Plan (Flex Plan).
Please see your employer’s Plan Document for details of the Flex Plan rules and regulations before participating in the program.
What is a Flexible Benefit Plan?What is a Flexible Benefit Plan?
Medical Reimbursement Account
Medical Reimbursement AccountMedical Reimbursement Account
This category allows you to pay for your (and your legal dependents’) qualified medical, dental, vision, and other eligible expenses on a pre-tax basis.
The expenses need to be for out-of-pocket expenses that are not reimbursed or paid for by any other sources.
The services must be performed within the Plan Year (meaning dates of service must be within the Plan Year).
Medical Reimbursement Account
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What expenses qualify in the Medical What expenses qualify in the Medical Reimbursement Account?Reimbursement Account?
Eligible Out-of-Pocket Expenses Include: Medical insurance deductibles, co-pays and co-insurance Dental insurance deductibles and co-insurance Dental expenses such as exams, caps, crowns, bridges &
fillings Orthodontia Vision exams, glasses, frames, contact lenses & supplies Laser eye surgery Hearing aids (including batteries) Routine exams/physicals/mammograms Chiropractor costs Prescription drugs Mileage for medical care
Medical Reimbursement Account
Expenses which are NOT eligible include: Surgery for cosmetic reasons Breast pump rental Medical supplies that are not medically necessary Teeth bleaching/whitening/bonding Health club membership dues Over-the-counter vitamins and other dietary
supplements for general health purposes Cosmetic drugs Marriage counseling Group insurance premiums deducted from your
paycheck
Medical Reimbursement AccountMedical Reimbursement Account
Medical Reimbursement Account
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How does the Medical Reimbursement How does the Medical Reimbursement Account work?Account work?
Estimate your family’s out-of-pocket cost for qualified medical expenses during the Plan Year.
Ask your Human Resources department for the medical maximum that is allowed for the Plan Year.
Authorize your employer to deduct this amount from your paycheck in equal installments throughout the Plan Year.
Submit claims to DBS for reimbursement as you incur expenses.
Medical Reimbursement Account
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How does the Medical Reimbursement Account How does the Medical Reimbursement Account work?work?
DBS verifies the expense based on IRS guidelines and reimburses you directly. Note: other methods for accessing your account may be in place at your employer.
Reimbursement is NOT limited to the current account balance. Your entire annual election is available for reimbursement when you incur the expenses.
Monies in the Medical Reimbursement Account can be used for any expense that qualifies within the category. For example, money set aside for your glasses can be used for your child’s dental care.
Medical Reimbursement Account
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Benefits of the Medical Reimbursement AccountBenefits of the Medical Reimbursement Account
Tax-free money – you save approximately 15%-30% in taxes.
Flexible – use the money anywhere within the category.
Ability for reimbursement of the full Plan Year amount if expenses are incurred early in the Plan Year.
Medical Reimbursement Account
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What if I don’t use all my money?What if I don’t use all my money?
According to the Federal rules, unused money is forfeited at the end of the Plan Year, if all claims are not submitted during the run-out period.
However, most people do not leave money in the plan because…
…they only set aside money for predictable expenses.
…they submit their smaller expenses for items such as diabetic supplies, contact lens saline solution, and medical mileage, to use up their monies.
Medical Reimbursement Account
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Can I claim the expenses in the Medical Can I claim the expenses in the Medical Reimbursement Account from my income taxes?Reimbursement Account from my income taxes?
No, the expenses reimbursed under the Medical Reimbursement Account cannot be used toward Medical Itemization (Schedule A) on your Federal Tax return.
Consult your tax advisor to see which method benefits you most.
DBS does not provide tax advice.
Medical Reimbursement Account
Important NoteImportant Note
The Dependent Care Reimbursement Account and the Medical Reimbursement Account are separate categories.
!!
Pre-tax dollars from one account may not be used for expenses in the other account.
Medical Reimbursement Account
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In Summary:In Summary:
The Medical Reimbursement Account is an excellent way to reduce your taxes.
Consult your tax advisor to see if this account can benefit you.
Please review the other presentations to learn more about the plan.
Ask your employer how you can enroll in the plan and start reducing your taxes!
Medical Reimbursement Account
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Claim forms may be downloaded from our website.
www.dbsbenefits.com
Diversified Benefit Services, Inc. Customer Service Representatives
are available Monday – Friday 8:30 a.m. – 5:00 p.m. (CST)
1- (800)-234-1229 1- (262)-367-3300
Medical Reimbursement Account
Additional questions?Additional questions?
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Filing a Section 125Flexible Benefit Plan Claim
How to File a Claim
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Overview for Claim Filing and ReimbursementOverview for Claim Filing and Reimbursement
Incur your medical, dental, vision, dependent care and other expenses as you normally would.
As you incur expenses, save documentation from the service providers that verifies your expenses.
At any time during the Plan Year, you may choose to submit your expenses for reimbursement.
Complete a 125-FSA Claim Form and submit it to DBS, Inc. with copies of your documentation.
DBS, Inc. substantiates the claim and reimburses you for your expenses.
How to File a Claim
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Completing the 125-FSA Claim FormCompleting the 125-FSA Claim Form
Make sure to complete and sign the top section of the 125-FSA Claim Form by printing your full name, e-mail address (if you have one), name of your employer and your participant ID number (assigned by DBS, Inc.) or Social Security number.
In addition, complete Dependent Care Reimbursement Account box for your dependent care expenses and/or the Medical Reimbursement Account box for your medical, dental, and vision type expenses.
Claim forms may be mailed or faxed to DBS, Inc. The address and fax number are shown on the form.
The next slide illustrates how to complete the claim form.
How to File a Claim
Claim Form 125-FSA Example
Claim Form
Diversified Benefit Services, Inc.How to File a Claim
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Jon Doe
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Claim Form – Dependent Care SectionClaim Form – Dependent Care Section
Show the amount of expense incurred, the care provider name and Social Security or Federal tax ID number, and the dates during which you incurred the expense. NOTE: you can only claim services that have been performed. If a representative of the care provider signs the form, a receipt does not have to be included with your claim.
How to File a ClaimDiversified Benefit Services, Inc.
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Claim Form – Medical Reimbursement SectionClaim Form – Medical Reimbursement Section
Diversified Benefit Services, Inc.
Along with your claim form, include copiescopies of your insurance EOB forms or itemized bills, that show the date(s) of service, the amount of your out-of-pocket expense, the name of the Provider and the type of expense. Retain the originalsoriginals for your records.
How to File a Claim
Types of documentationTypes of documentation
Always submit copies of your expense documentation. Keep the originals for your records.
For the Medical Reimbursement Account, your documents must show:
1) The type of expense
2) The date of service – not billing date
3) Name of the service provider
4) Your out-of-pocket cost for the expense
Examples of proper documentation to submit include:
Explanation of Benefits forms (EOBs) from insurance companies
Dental or vision invoices showing the above items (not balance forward statements)
Drug copay slips from the pharmacy
How to File a Claim
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Where do I submit claims?Where do I submit claims?
Diversified Benefit Services, Inc.
P.O. Box 260
Hartland, WI 53029
Or fax claims to:
1- (262)-367-5938
Submit your signed Claim Form and expense documentation to:
How to File a Claim
Claims must be for services rendered during the Plan Year.
Claims must be submitted by the end of the claims run-out period after the end of each Plan Year.
All claims are confidential and will only be seen by a DBS representative.
You may submit claims as you incur expenses or submit a claim with multiple expenses and multiple dates of service.
Filing a claim is easy!
Using the Plan saves you approximately 15-30% in taxes on your expenses.
How to File a Claim
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Other Claims InformationOther Claims Information
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www.dbsbenefits.com
Claim forms may be downloaded from our website.
Diversified Benefit Services, Inc. Customer Service Representatives
are available Monday – Friday 8:30 a.m. – 5:00 p.m. (CST)
1- (800)-234-1229 1- (262)-367-3300
Additional questions?Additional questions?
How to File a Claim