FREQUENTLY ASKED QUESTIONS
What is a Flexible Benefits Plan?
A Flexible Benefits Plan is an Internal Revenue Service program that allows you to pay your portion of certain benefits on a pre-tax basis. A Flexible Benefits Plan also allows you to set money aside from your pay check and avoid federal, state (varies by state), and FICA tax on the portion you designate to your flexible spending account(s). You are able to participate in a Flexible Benefits Plan only because your employer has implemented this benefit for you.
What is a flexible spending account (FSA)?
There are two spending accounts available to you: Non-reimbursed Medical Spending Account and Dependent Care Assistance Spending Account. These two accounts are very separate accounts with specific differences.
Non-reimbursed Medical Spending Account: This account allows you to pay for out of pocket medical, vision, and dental expenses for you, your spouse, and your dependents while increasing your take home pay. You can pick up the tab for medical, dental, and vision expenses that are not covered by insurance (such as copays, coinsurance, and deductibles) with money you earn but don’t pay taxes on.
Dependent Care Assistance Spending Account: This account allows you to pay for child care and/or elder care while increasing your take home pay.
How do I save money by participating in a flexible spending account?
You determine the amount of “known” out of pocket expenses for the upcoming Plan year and elect to have an equal amount deducted from each pay check during the plan year. This amount will be deducted from your pay check before your tax obligation is calculated. By reducing your gross pay before your tax obligation is calculated, your federal, state, and FICA obligation is reduced. You can save 25% to 45%, depending on your tax bracket.
How do I determine how much I should contribute?
You determine the amount of “known” out of pocket expenses for the upcoming Plan year for you, your spouse, and your dependents (See the Employee Tax Savings Worksheet) You elect to set aside this amount of money (pre-tax) from each pay check during the Plan Year. Be conservative! Don’t elect to have more money taken out of your pay check than you have determined you will spend. Consider only those expenses you know you and your dependents will incur during the Plan year. If you contribute dollars and do not spend them, you will lose any remaining balance in your account(s) at the end of the Plan year.
What is the Plan Year?
The Plan year is the 12 month period specified in the Summary Plan Description (SPD) that determines the beginning and ending dates of pay check contributions. Your employer can assist you with locating a copy. All expenses must be incurred, not paid, during the Plan Year.
Will I save more money by participating in the dependent care flexible spending account or by receiving the dependent care credit on my tax return?
In general, the higher your adjusted gross income, the more likely it is that you will benefit more from participating in the dependent care flexible spending account than from taking the tax credit. Any amount you elect to contribute to the dependent care flexible spending account reduces your potential tax credit. You should consult your tax advisor to find out which works best in your individual situation.
What is the maximum amount I can elect annually to set aside pre-tax?
The IRS will allow you to set aside $5,000 per calendar year in the dependent care flexible spending account. If you and your spouse file individual tax returns, you may each contribute $2,500 per calendar year.
The maximum Plan Year election for the non-reimbursed medical spending account is determined by your Employer and that amount can be found in your Summary Plan Description (SPD).
Can I change my election during the plan year if I have an unexpected out of pocket expense?
You can only change your election if you have a qualifying change of status event. Qualifying events include:
• A Change in your legal marital status
• A change in the number of dependents you have
• A change in your or your dependent’s work schedule that affects eligibility
What happens if I don’t spend all of the money I elect to have set aside pre-tax?
Any funds remaining in your account after all eligible reimbursements have been made will be forfeited to the cafeteria plan. For this reason, it’s very important that you plan carefully using the worksheet provided. Do not put more money in your Flex plan that you know you will use.
It’s impossible to project with 100% accuracy, so you may come up short and have more expenses than you originally set aside for. That’s better than having money left!
It is important also to realize that leaving money in your account at the end of the year does not necessarily mean you lost money. For example, If you contributed $1,000, you expected to save approximately $250 (based on a 25% tax bracket). If you left $50 in your account at the end of the year, you reduced your potential savings to $200, rather than the $250 you expected to save. You didn’t actually “loose” any money!
What expenses are eligible for reimbursement from a Non-Reimbursed Medical FSA?
Generally speaking, a health FSA can only reimburse employees for amounts expended for medical care. The IRS defines “medical care” to include amounts paid “for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body”.
Any treatment for a specific medical condition is reimbursable. Cosmetic or Preventative expenses are not reimbursable.
Please refer to our list of eligible expenses for more detailed information.
What expenses are eligible for reimbursement from a Dependent Care Assistance FSA?
Eligible expenses include care for a dependent under the age of 13 and/or care of a dependent physically or mentally incapable of self care. Also eligible is custodial or elder care (dependent must live in your home a minimum of 8 hours per day).
Ineligible expenses include kindergarten, field trips, registration fees, late payment fees, lunches, supplies, overnight camps, transportation fees, care of a dependent who lives outside the employee’s home.
Who is considered a dependent?
Non-reimbursed medical FSA: if you claim the individual on your tax return, you can claim them under the Cafeteria plan.
Dependent Care Assistance FSA: children under the age of thirteen or adults or children over the age of thirteen who are incapable of self-care are considered dependents. In addition, the dependent must reside with the participant for the majority of the year in order to be eligible for coverage under the dependent care FSA.
How can I find out the balance in my account(s)?
Visit www.benefitspaymentssystem.com. You will need to set up an account. Then you will be able to check your account balance, account history, update your email address, etc.
You can also call or email our customer service department during normal business hours. We will be happy to provide you with that information.
How do I get reimbursed?
You may submit your claim form and supporting documentation to:
Innovative Employee Benefits, Inc.
PO Box 470257
Charlotte, NC 28247
FAX: 704-541-5984, 866-541-5984
If your employer offers the Benefits Card option, please refer to that specific section under “Services” for more information.
How is orthodontia expenses reimbursed?
Orthodontic expenses are eligible expenses. However, treatments generally cover an extended period of time such as 24 or 36 months. The orthodontist’s initial fee for installing the braces is reimbursable when the braces are applied. You can then be reimbursed a proportionate amount each month for the duration of the orthodontia contract. In other words, you can be reimbursed only as services are incurred.
How does my Benefits Card work?
All Flexible Spending accounts and Health Reimbursement Arrangement (HRAs) are not designed the same. The Internal Revenue Service (IRS) dictates many parameters of how an FSA and HRA are designed and administered but the employer also has options in designing their own individual plan For this reason, the Benefits Card usage parameters can vary from employer group to employer group.
Generally speaking, the Benefits Card makes using your FSA or HRA dollars simple and easy. The card deducts each payment directly from the applicable account. The card virtually eliminates the endless paperwork and reimbursement wait time that used to make FSAs so complex and cumbersome. All you have to do is save receipts for all your FSA purchases in the event they are requested by IEB.
Depending on the specific benefits offered by your employer, you can use the Benefits Card to pay for qualified healthcare, dependent care, or transit expenses. Each account is subject to the specifications under your plan, but here are just a few general guidelines to help you:
Healthcare account, including FSA and HRA
- Qualified locations: doctor’s office, dentist’s office, hospitals, pharmacies, vision service locations
- Qualified expenses: chiropractic services, copays and deductibles, contact lenses ad saline solution, eyeglasses, hearing aids, hospital visits, prescription drugs.
Dependent Care AccountQualified locations: dependent care facilities
- Qualified expenses: day care services
- Qualified locations: parking garages, mass transit authorities
- Qualified expenses: commuter services
*all plans vary by plan design so see your Summary Plan Description (SPD) for specific eligibility
Easy as 1-2-3
Check your account balance online. Log on to www.benefitspaymentssystem.com to get access to FAQs, transaction history, claim status, and more.
Swipe your Benefits Card at the point-of-sale for eligible products and services.
Keep all your receipts. In some instances your plan administrator may request receipts to verify your claim.
For more information, contact IEB.