Contact: Wendel Sloan at 505.562.2253
Reporter: Business Affairs Office
Beginning Jan. 1, 2003, an IRS Section 125 "Flexible Spending Plan" will be available to eligible ENMU employees. The Flexible Spending Plan provides an opportunity for regular employees who work over 20 hours per week to earmark a portion of their income for certain expenses - like insurance deductibles, co-payments, other out-of-pocket medical expenses and day-care on a pre-tax basis.
ENMU has contracted with Cobra Compliance Systems, Inc. to administer this new plan. Employees who may be interested in the program are encouraged to attend one of three informative presentations to be held in the Becky Sharp Auditorium, College of Business. These presentations are scheduled for Wednesday, Nov. 20 at 3 p.m. and Thursday, Nov. 21 at 9 a.m. and 2 p.m.
Attached are some frequently asked questions about Flexible Spending Plan and an example of how such a plan could affect the take home of a participating employee.
Why should I participate in the Flexible Benefits Plan?
One of the greatest advantages of the Plan is the tax savings generated and the increase in your spendable income. A Flexible Benefits Plan applies to out-of-pocket expenses you cover with your spendable income, but allows you to pay for these expenses with income before you are taxed. Another advantage to participating in the plan is the opportunity it offers for you to budget for health care expenses by withholding a small amount from each paycheck. Without that tool, you may be faced with having to come up with large amounts of money at one time. This is especially advantageous if you are scheduling a surgery, anticipating maternity expenses, or if you do not have other coverage for dental and vision expenses. Even those with coverage for medical, dental and vision usually have deductibles, co-pays, and other out-of-pocket expenses to cover.
What types of expenses are eligible?
The Flexible Benefits Plan allows you to elect to have pre-tax dollars withheld from your paycheck to fund three types of expenses. You can choose to participate in any combination of the three types depending on your individual needs. (In some cases, your employer may specify that all employee contributions to group health plan premiums are a pre-tax payroll deduction.)
Health Care Flexible Spending Account (FSA) - You may set aside pre-tax dollars to cover eligible medical, dental or vision expenses that are not covered by any other health plan that you or your dependents have. You may refer to the enrollment form for a list of some eligible and ineligible expenses.
Dependent Care Flexible Spending Account (FSA) - You can use pre-tax dollars to cover eligible expenses to care for a dependent while you work, or if you are married, while you and your spouse work or your spouse attends school full-time. Home day care, dependent care centers, preschool, and before and after school expenses are all covered.
Who is eligible to participate in the FSA?
Employees who qualify for ENMU health insurance and any of their qualified Internal Revenue Service (IRS) dependents (anyone you claim as a dependent on your income tax return) are eligible to submit expenses under the Health Care FSA. For the Dependent Care FSA, expenses for your children under the age of 13 and your spouse or any other qualified IRS dependents, if mentally or physically disabled, are eligible.
How do I sign up?
To enroll in either or both the Health Care and Dependent Care FSA, you simply need to fill out the FSA Enrollment Form at the beginning of each plan year. You may indicate an annual amount you wish to elect and your per paycheck deduction will be calculated automatically. Or if you prefer, you can chose a per paycheck deduction that fits your budget and your annual election will be automatically determined. Please keep in mind that the Health Care and Dependent Care FSA elections are separate. You cannot move contributions from one account to another. Also it is very important to note that the elections you make are for the entire year. Your elections cannot be changed unless certain status changes occur and they are allowed in the Plan as a reason for election change.
How do I submit a claim for the Health Care or Dependent Care FSA?
You must complete an FSA Reimbursement Form for each Health Care or Dependent Care FSA claim you file. In addition, according to IRS regulations, you must submit appropriate documentation for each claim. You may only submit claims that are "incurred" during the plan year. "Incurred" refers to when the service is provided, not when you are billed or pay for the expense. The documentation requirements are listed on the FSA Reimbursement Form to assist you in properly filing your claim. Following these guidelines will ensure you receive your reimbursement without unnecessary delays.
What happens if I don't use all the money elected in my FSA?
The IRS has imposed a "use it or lose it" rule. Any money remaining in your FSA account at the end of the plan year is forfeited. Please remember, you have 90 days following the end of the plan year to submit expenses that were incurred during the plan year. It is important to estimate your expenses carefully before making your elections. You should only contribute to the FSA for expenses that you can accurately predict will be incurred during the year. Cobra Compliance System will assist you in monitoring your Flexible Spending Accounts by providing you with quarterly account statements. You can minimize forfeitures by scheduling routine exams, purchasing glasses or contact lenses, and scheduling dental appointments, etc., at the end of the plan year to use up your election amounts.