Flexible Benefits Plans: What is it?
- A Flex Plan functions much like a personal expense account. You set aside money from each pay check PRE-TAX to pay for eligible expenses. This reduces the amount you pay in FICA, Medicare, other payroll taxes, and increases your take home pay!
- Your employer may offer expense categories such as the following:
Health Savings Account (HSA)
Flexible Spending Account (FSA)
Dependent Day Care Expenses (DC)
Unreimbursed Medical, Dental, and Vision Expenses
Individual Insurance Premiums
Health Reimbursement Account (HRA)
- See your employers Summary Plan Description to find out which options are available to you, the participant.
Pre-Taxed Money? Yes, TAX FREE MONEY!
- The voluntary salary reduction amount an employee elects to set aside for FSA expenses is taken BEFORE taxes. This means there are no payroll taxes deducted from this money.
- Unlike Health Savings Accounts (HSAs), which are required to be reported on the Form 1040 or Form 1040, there are no reporting requirements for FSAs on your income tax return.
*If you enroll in the Dependent Day Care Expense category for an FSA, the amount elected for Dependent Care will be documented in box 10 of your W-2 form.
How would a Flexible Benefits Plan help me?
- Your contributions to your Flex Plan are exempt from taxes, as listed above*, and will never be reported as gross income to you.
- You can request reimbursement funds from your Health FSA to pay qualified medical expenses even if you have not yet had the funds deducted from your paycheck.
Your NET Take Home is ALWAYS greater with Flexible Benefits!
- Flex accounts allow you to reduce your taxes – The higher your tax bracket, the greater your savings when using a Flex Plan! See our example, using a tax base of 28%, calculation below:
Find out how much you can save! Use our Savings Calculator to calculate your savings!
- Using pre-tax dollars to pay medical insurance premiums, copayments and other qualified expenses, puts dollars back in your pocket rather than Uncle Sam’s!
* Check with your Flexible Benefits Specialist or HR Director to determine whether your flex plan qualifies for a state tax exemption.
Want to know more about how a Flex Plan works? Visit Frequently Asked Questions (FAQ's).