| 1 What is a Flexible
Benefits program? Section 125 of the internal Revenue Code allows employees to
pay specific health-related expenses as well as dependent care expenses with pretax
dollars. This results in a reduction in your Federal. State, Social Security, and Medicare
taxes.
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2 How is a Flexible Benefits
program funded?
You determine how much you and your eligible dependents will spend annually on these
expenses. That amount is deducted from your GROSS earnings through payroll deduction. The
result is an increase in net take home pay because your payroll deductions become
NON-TAXABLE INCOME.
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3 How do I know if I should
participate in the Flexible Benefits program?
First you should determine what your typical medical, dental and qualifying dependent
care out-of-pocket expenses may be for the year, for yourself and your eligible
dependents. You can do this with the aide of a Flex Survey Form, which is available from
enrollment specialists, or your HR Department. The expenses might include the deductible
of a Medical Plan or Dental Insurance Plan, your share of expenses under Major Medical,
and any other eligible out-of-pocket health expenses you anticipate (such as routine
medical examinations, contact lenses prescription eye glasses) and dependent child care or
elder care expenses. A list of qualifying expenses is included for your use. The second
point to consider is how much you can afford to redirect from your take-home pay. You
should be sure you can meet all of your fixed living expenses without the amount of your
salary redirection, until you are able to collect reimbursement from your Flex Account.
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4 Even though I claim
reimbursement from the Flexible Benefits program for expenses that would otherwise be tax
deductible, may I also claim these amounts as a deduction on my tax return?
NO! Once you have received reimbursement from the Program for any qualified expenses,
you may not claim the same amounts as a deduction or credit on your income tax return.
However, you may be able to deduct expenses that exceed the amount of reimbursement under
the Flexible Benefits Program. Consult your tax advisor for your specific situation.
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5 What is the maximum dollar
amount I can contribute to the Flexible Benefits program?
The maximum dollar amount that each employee may contribute to the Flexible Benefits
Program is determined by your Employer and is indicated in your Summary Plan Description.
Your Flexible Compensation Enrollment form will
indicate the per pay period dollars which will be contributed to each of the accounts
(Medical, Dependent Care, etc.). The total amount cannot be more than the annual maximum
specified by the Plan, for each account.
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6 May I switch amounts
from one Flexible Benefits account to another?
Generally NO! During the Plan year you may not change what was on your original
enrollment form. You can, however, make changes when you fill out a new enrollment form
each year. You can also file a new enrollment form in the event of a change in family
status. See your Summary Plan Description for an explanation of the specific events which
would allow for a change in family status.
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7 Can I put the maximum
amount into the Flexible Benefits program at the beginning of the year in one payment?
NO! Money will be credited to your account(s) on each payday in equal installments (If
you should go out on an unpaid leave of absence or Family Medical Leave, please contact
your Human Resource Department for your Company’s specific guidelines). You
should also know that once you decide on a salary reduction amount you cannot change or
cancel it until the next Plan year, unless there has been a change in family status.
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8 Can I ask that my
contributions to the Flexible Benefits program be stopped if I really need the money? Can
I take it out during the year for hardship?
NO! Contributions cannot be stopped during the calendar year. By allowing contributions
to be stopped, we jeopardize the tax advantage of the Program. You may not take money out
of the Program during the calendar year unless it is for reimbursement of an eligible
expense.
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9 Who are considered my
eligible dependents for medical expense purposes?
Anyone you claim as a legal dependent on your federal income tax return is an eligible
dependent for medical and dependent care expense purposes. Children of divorced and
separated parents please refer to the Rules for Child of Divorced or Separated Parents.
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10 What dependent care
expenses are eligible for reimbursement through the Flexible Benefits program?
Reimbursable dependent care expenses are generally defined as those that are eligible
for a tax credit on your federal tax return. If you are married your spouse must be
employed (unless disabled or attending school full-time), and the dependent care expense
must be for the specific purpose of allowing both you and your spouse to work (attend
full-time classes or care for him/herself in the case of disability). The amount of
reimbursable expenses cannot exceed the lesser of either your earnings or those of your
spouse. The overall maximum dependent care deduction is $5000 per year. If you are married
and file a separate income tax return, the annual maximum is $2,500. In the event of a
disabled spouse or full-time student, the dependent care deduction is limited to $200 per
month for one (1) child or dependent and $400 per month for more than one (1) child or
dependent. Dependent care expenses can be for the care of any legal dependent under the
age of 13 or any other dependent who is physically or mentally incapable of self-care.
Eligible charges include those for baby-sitters, companions and day-care centers that meet
local regulations. Additionally, housekeepers and summer day camps may be eligible for
reimbursement under the dependent care provisions. Dependent care expenses paid to your
legal dependent are not eligible for reimbursement. Also, payments made to your child
under age 19, even if no longer a dependent, are not eligible for reimbursement.
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11 If I use the
Flexible Benefits program for dependent care expense, what impact will it have on the
federal child care tax credit?
Effective January 1, 1989, your federal child care tax credit will be reduced dollar
for dollar by the amount of salary redirected to the dependent care spending account. You
cannot take a double deduction.
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12 Will participation in
flex reduce my social security benefits at retirement or if I become disabled?
YES, only if your taxable wages are less than the Social Security wage base (or are
reduced below the base) for several years. The Social Security wage base is, generally
speaking, the amount of wages up to which Social Security taxes are withheld. Social
Security benefits are based on an average of your wages and the number of years you work.
The maximum benefit available will result only If your taxable wages have met or exceeded
the wage base for most of the years you worked. Therefore, if your salary is reduced below
the wage base, or your salary has been below it for most of your working career, your
Social Security Supplement feature is available for you to insure against that potential
loss. Please discuss this with your enrollment personnel, or the M.A. Services claim
center.
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13 How many claims can
I file?
Claims processing occurs each pay period and checks are mailed to correspond with the
day of the week that you receive your paycheck. That is, if you normally receive a
paycheck on Thursday, you will also receive a Flex check on Thursday, at your home, for
any eligible reimbursements that had been processed in the M.A. Services claims center by
the previous Tuesday. This occurs on schedule unless your employer fails to forward
reimbursement funds to us on a timely basis. You can submit as many claims as you wish, as
long as the dates of services do not exceed the current date and are within the current
Plan year.
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14 Will I have to keep
track of my account(s)?
You can. However, each time you file a claim and receive a payment, the reimbursement
check stub will detail the current deposits, reimbursements, and balance(s) of your
account(s). You will also receive a cumulative account balance semi-annually, whether or
not you have submitted claims, so that you will be aware of your accumulated account
balance. In addition, during the last quarter, you will receive an additional statement to
remind you of the existing balance(s) in your account(s). It is important that you
"use your balance, or lose it!"
The "Use it or Lose it" Principle.
Flex is established in accordance with Federal IRS regulations that determine how the
Plan funds may be used. If you allocate money towards a certain benefit account during the
Plan year and fail to use those funds for benefits eligible under that benefit account,
you will lose the excess. Excess funds do not revert to M.A. Services. They go back to the
Plan to offset administration costs and/or offset benefit costs in the future. What you
don't spend from your allocation, however, will be lost to you personally. Therefore you
should be careful and conservative in your estimates!
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15 When can I begin
filing claims?
As soon as your Program begins, you may file claims for eligible expenses. The expenses
must be incurred during the Plan year UNLESS the employee terminates employment. In that event, the employee can only submit claims incurred through his/her termination date..
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16 Is there any reason I
might be able to change the amount(s) withheld from my salary?
The answer is yes, but only if you experience what is called a change in family status
during the year.
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 ChangeofStatus.com.
17 What
constitutes a qualified change in status?
If you add a person to your family (birth, adoption, or marriage), if
your family should decrease in size (death, legal separation or divorce), or if your
spouse terminates employment, you may change the amounts by which your salary will be
redirected. For specific information about this provision, talk to your HR Department or
the M.A. Services claims center. You may be asked for proof of the change.
ChangeofStatus.com
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Flexible Benefits Processing Questions
18 Why did I not receive my check?
Problems with postal delivery may delay your check. Be sure you notify us of your
current address. Please notify us by phone or by use of the Employee Change Form supplied
by your company payroll specialist. A delay in transfer of funds by your employer may also
delay your receipt of a check.
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19 How much have I
accumulated in my account(s)?
You may call at anytime between the hours of 9:00AM and 3:00PM to request the current
accumulated balance in your account(s). At other times we may be unable to access your
account information.
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20 How do I receive a
check from my dependent care account?
We will process a check for the amount of the receipts that you submit for your
Dependent Care Expenses up to the current balance in your Dependent Care account. We must
have a Dependent Care Registration Form on file for the current year. Also, please make
sure that the dates of service are on your receipt. Day care services are not reimbursed
in advance.
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21 If I submit a large
bill for unreimbursed medical expenses when and how will I receive my reimbursement?
When you submit your bill, you will receive your full reimbursement up to the maximum
deduction for the Plan year for the category of unreimbursed Medical Expenses, only. The
full payment will only be made if your receipts indicate dates of service which have
already occurred.
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22 If I had medical expenses
in the previous year, can I claim these expenses this plan year if I receive a bill during
the current plan year?
NO! The service has to be incurred during your current Plan year. The service must also
be a valid medical service backed by a legitimate diagnosis and provided by a licensed
practitioner. You may be asked for a prescription or a doctor’s written order.
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23 Where can I find out
if a particular expense is reimbursable under the unreimbursed health expense category?
You would have to refer to your Flexible Benefits material for a list of eligible
expenses, or you may call the M. A. Services office any working day between 9:00AM and
4:30PM to speak with a Flex representative. Please refer to the question above to read
additional information regarding reimbursable expenses.
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24 I have lost or
misplaced my check. Can you reissue a new one?
YES. However, duplicate checks will only be reissued when we can prove that the
original check was not cashed. That can take 30 days from the date of issue. You may also
be asked to sign a liability form to insure that you would not later cash the
"lost" check, should it turn up.
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