Flexible benefits refer to the IRS Section 125 Plan that may be utilized to tax shelter employee-paid health care, dental, cancer and vision insurance premiums. The Section 125 Plan is often referred to as a “Cafeteria Plan” because you may choose from certain items to tax-shelter, much like you may choose food items in a cafeteria. A change in family status that affects insurance premiums must be processed through Human Resources within 30 days of the event.
These benefits include unreimbursed medical expenses (excludes premiums) and dependent care expenses. All eligible expenses can reduce taxable income, thereby increasing take-home pay.
Unreimbursed Medical Expense Account (URM)
An Unreimbursed Medical Expense Account may be used to reimburse yourself for eligible medical expenses incurred for yourself, your spouse, and your eligible dependents. Your employer establishes your maximum for each plan year, which is $3,600 for plan year 2012. Effective January 1, 2013, the maximum unreimbursed medical election limit will be $2,500.You may only be reimbursed for expenses incurred for services rendered during the plan year, or if applicable, during the grace period immediately after the end of your plan year. Not all employers offer the grace period; please check with your employer to see if this applies to you. You may also submit your claim for reimbursement on or before the run-off period ends, for claims incurred during the plan year or grace period (if applicable). The length of the run-off period may vary so please consult your employer for details. For a listing of eligible and ineligible expenses, visit the American Fidelity website: http://www.afadvantage.com/flex-guidelines.asp.
Effective January 1, 2013, the maximum unreimbursed medical election limit will be $2,500.
Dependent Day Care Expense Account (DDC)
Your Dependent Day Care Expense Account may be used to reimburse yourself for eligible dependent day care expenses incurred to allow you (and your spouse if you are married) to work, or for your spouse to look for work, go to school full-time, or who is incapable of self-care. Work may include actively looking for work, yet unpaid volunteer work or volunteer work for a nominal salary does not qualify. You may allocate up to $5,000 per tax year for reimbursement of dependent day care services if filing taxes as head of household or ($2,500 if you are married and file a separate return.
Grace Period and Run Off Period
The grace period for the Section 125 Flexible Benefit Plan for Unreimbursed Medical Expense Account only is an additional 70 days at the end of your plan year during which you can incur and/or submit medical expense claims for reimbursement.
You will have a six month run-off period, January 1 through June 30, during which you can submit claims for reimbursement from the immediately preceding plan year and grace period.
The grace period does not apply to the Dependent Day Care Expense Account. You will have a 90 day run-off period after the end of the plan year to submit dependent care claims for reimbursement from the immediately preceding plan year.
For more information regarding Unreimbursed Medical or Dependent Day Care expense accounts, please review the American Fidelity Flex Guide for Section 125 Flexible Benefit Plans at http://www.afadvantage.com/forms/afes/flexguide.pdf