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<br />FLEXIBLE BENEFIT PLAN <br /> <br />A flexible benefits plan is a benefit designed to increase employee's spendable income by reducing their taxes. <br />Internal Revenue Code Section 125 allows employers to provide three basic types of flexible benefits plans to their <br />employees. <br />1. Premium only plan <br />2. Dependent Care spending account <br />3. Unreimbursed Healthcare spending account <br /> <br />How the Program Works <br />The Flexible Benefits Plan lets you set aside part of your pay on a before-tax basis to: <br />1. Pay certain insnrance premiums through the Pre-tax Premium Conversion Option; <br />2. Set up an Unreimbursed Health Care Reimbursement Account to pay certain medical, dental, vision <br />and hearing care expenses not covered by insurance (Umeimbursed Health Care Reimbursement Account <br />Maximums $5,200 or the amount established by the employer); and <br />3. Set up a Dependent Care Reimbursement Account to pay eligible child care and dependent care <br />expenses while you and your spouse (if married) are at work. $5,000 (or $2,500 for married employees who <br />file separate returns). <br />These options are explained in more detail in the sections to follow. <br /> <br />What are Before- Tax Dollars? <br /> <br />The before-tax dollars you contribute to this program is money that is never taxed for federal income tax and social <br />security tax purposes. Basically, the program reduces your taxable income. <br /> <br />Participating in the Flexible Benefits Plan will not affect your other benefits or your employment contract. They will <br />continue to be based on your actual income. Your W -2 form, however, will show a reduced amount of pay <br />according to your Pre-tax Premium and Reimbursement Account elections. <br /> <br />Eligibility <br />You are eligible for the flexible spending account plans for premium only, dependent care and/or health care <br />expenses on the plan's effective date if you are eligible to receive other employee benefits from your employer. You <br />will have the opportunity to make before-tax contributions to each of the flexible spending account plans. You can <br />make your elections by completing the election form and returning it to your personnel department. <br /> <br />Changes in Eligibility <br />You will cease to be eligible for the plan if the following occurs: <br />1. the plan terminates, <br />2. you are no longer an eligible employee of the Member, or <br />3. you elect to revoke your elections because you qualify for leave under the Family and Medical Leave Act <br />of 1993 (FMLA). <br />If you revoke your eligibility under the provisions of FMLA and then return to work you may reinstate your <br />elections on the same terms as prior to the leave. <br /> <br />Choosing a Deposit Amount <br />When you emoll in the plan, you must specify the amount of your income you want deducted, on a pre-tax basis for <br />the pre-tax premium plan, dependent care spending account and/or umeimbursed health care spending account. <br />Equal payroll deductions will be taken from each paycheck during the plan year. The unreimbursed healthcare <br />spending account contributions are established by the employer with a maximum amount of $5,200. <br /> <br />Page 5 <br />