Take a "quick tour" at only the Flex Plan
Take a "quick tour" at only the TFA Plan
Overview
Why participate in the Flex Plan?
How do I benefit from using pre-tax dollars?
What will it cost me to participate?
How does the Flex Plan work?
Since pre-tax dollars reduce Social Security taxes (FICA), won’t my Social Security be affected?
Does setting aside moneys in the Flex Plan affect any other benefits?
What happens if I no longer work here?
Where can I get the specific Key Rules for my plan?
Who do I call for questions about the Plan, enrollment, account balances or claims reimbursement
Examples of Allowed Expenses
What are allowable expenses for the Healthcare Premiums Account?
What are allowable expenses for the Unreimbursed Healthcare Expenses Account?
What are allowable expenses for the Child/Dependent Care Account?
What are allowable expenses for the Mass Transit Account?
What are allowable expenses for the Parking Expenses Account?
Enrollment
Can I participate in the Flex Plan even if I am not in the group health insurance plan?
How do I get started?
If I miss this enrollment when can I enroll again?
If I was not eligible as of the start of the Plan Year, when can I start?
Do I have to sign up each year?
When can I change my elections?
Claims Reimbursement
Will my claims information be kept confidential?
How do I submit a request for claims reimbursement?
Can I use the expenses reimbursed in the Flex Plan as itemized on my tax return as deductions or credits?
Can I be reimbursed for Child/Dependent Care without providing the social security number (or Federal Tax ID)?
Can the payments be sent directly to the provider of the service?
Is the insurance company Explanation of Benefits (EOB) sufficient proof of payment?
Are there any limits to the amount I can be reimbursed?
Where can I get claims reimbursement forms?
Account Balances
How will I know how much is in any of my accounts?
What is the IRS "use it or lose it" rule?
What happens if I don't use all the money that I have set aside in the Flex Plan?
Can I transfer moneys between accounts?
Overview
Why participate in the Flex Plan?
The Flex Plan is optional. There are tax advantages because you set aside pre-tax payroll deductions for health insurance premiums, out-of-pocket healthcare expenses, and child or dependent care costs. When you set aside these moneys on a pre-tax basis your taxable income is lower when they calculate payroll taxes (FICA, federal and in most cases state and local) each paycheck and on your W-2. Based on your tax rate, savings may be anywhere from 20% to 40% of amounts deducted.
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How do I benefit from using pre-tax dollars?
Using pre-tax dollars for your payroll deductions reduces your Taxable Wages. At the end of the year, your W-2 will report your gross wages less your pre-tax payroll deductions, thus lowering your Federal, State, Local, FICA and Medicare taxes. See also How Do You Benefit.
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What will it cost me to participate?
All costs for set-up and administration are being paid by you employer. You only have to set aside moneys that you would be spending anyway for health care or day care during the Plan Year.
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How does the Flex Plan work?
First you select the annual amounts to set aside. Each payroll, a deduction is taken in equal amounts based on the annual election to fund your accounts as elected. For the Healthcare Premiums Account, the moneys are remitted directly to the insurance carrier under each plan of coverage. Otherwise, as expenses are incurred for yourself and your dependents, you submit a request for claims reimbursement. Reimbursement checks are made payable to you. Moneys paid to you will then reduce the amounts available in your accounts until the annual deductions are returned to you in full.
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Since pre-tax dollars reduce Social Security taxes (FICA), won’t my Social Security be affected?
Possibly, but not significantly. If your gross income less the annual elections is $106,800 or less in 2009 (thus reducing your 7.65% FICA and Medicare contributions). If over $106,800, then only your 1.45% Medicare contributions will be lower. Since you will be paying less FICA and Medicare today, the government provided benefits may be slightly lower when you retire. However, this impact is averaged over at least 10 years, may not be affected if you will be getting benefits from your spouse. Furthermore, the benefits contribution rate used for Social Security is based on interest rates, while your tax savings from using pre-tax dollars will be much greater. So if you are still concerned with your retirement, you can save in an IRA or Retirement Plan to easily offset the impacts. If you are still concerned with the impacts on your retirement, you can talk with your tax advisor, or contact us for assistance.
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Does setting aside moneys in the Flex Plan affect any other benefits?
No, the Flex Plan supplements other company provided employee benefits. No other company provided benefits are affected.
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What happens if I no longer work here?
Before you leave, the specific options available to you will be fully explained. In general, deposits made into your accounts can continue to be claimed throughout the plan year eventhough you are no longer on the payroll. With your last paycheck you will be able to make catch-up deductions, if you want to add to the amounts already made.
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Where can I get the specific Key Rules for my plan?
Forms are available with your Human Resources. Also, if you want us to E-mail a copy of the specific Key Rules You Should Know for your plan then we will gladly do so.
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Who do I call for questions about the Plan, enrollment, account balances or claims reimbursement?
For any inquiries about this Plan, or you account, simply contact BSI Administrative Services, Inc. by
Phone (212) 302-3539 or FAX 212-302-3552 or by E-Mail.
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Examples of Allowed Expenses
What are allowable expenses for the Healthcare Premiums Account?
Premiums paid by you as an employee towards group health insurance coverage for you or a dependent (including health insurance plans, HMO plans, dental plans, vision care plans, group term insurance, and group disability income, if applicable). See also Form WS3 - Healthcare Premiums Account Worksheet.
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What are allowable expenses for the Unreimbursed Healthcare Expenses Account?
Money set aside in this account can be used for healthcare not reimbursed under any other insurance plan for you or any dependent. Allowable expenses follow the IRS guidelines for your individual tax return (see Internal Revenue Code Section 215, instructions for IRS Form 1040, Schedule A, lines 1-4 and IRS Publication 502). Some examples of qualifying expenses include:
- deductibles, co-insurance, or other out-of-pocket expenses not covered by any insurance, or other reimbursement program.
- eye care including fees to eye doctors, eye exams, eye glasses, contact lenses, and sunglasses.
- dental care including checkups, x-rays, orthodontia/braces, etc.
- mental health and counseling.
- hearing aids, special phone equipment for the deaf.
- prescription drugs including medicines, insulin, nicotine patches, viagra, and birth control.
- over-the-counter drugs including cold medicines, aspirins, birth control, feminine hygiene products, pain relievers, ointments, analgesics, etc.
- holistic, eastern, or alternative medicine including acupunture, message therapy, and herbal remedies.
- chiropractic and other physical therapy.
- special schooling for physically or mentally handicapped, including remedial reading for dependents with dyslexia.
- well care, routine physical exams and immunizations.
- healthclubs when prescribed by a physician and not just for general health when accompanied by a prescription (or note from the doctor describing the ailments and treatments).
- any out-of-pocket hospital costs for in-patient stays, emergency room visits, or out-patient treatment.
- travel costs to and from medical care, including ambulances, taxis, trains, parking, tolls, subways, and when you use your car, an allowance of 24 cents per mile for gas and oil.
- special equipment authorized for medical care (wheelchairs, back braces, orthopedic shoes, arches, etc.).
See also Form WS1 - Unreimbursed Healthcare Account Worksheet.
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What are allowable expenses for the Child/Dependent Care Account?
Expenses for day care up to $5,000 per year (or if for married but filing separately the limit may be $2,500) or the lesser of your earned income (annual compensation) or your spouse's earned income. You and your spouse (if married) must both be working; otherwise, to qualify, your spouse must be a full-time student or disabled. An eligible dependent can be any age if mentally or physically handicapped; otherwise, the dependent must be under age 13.
The allowable deductions follow the IRS guidelines for your individual tax return (see the instructions to IRS Form 2441 and IRS Publication 503). For example, you may be able to include:
- fees to day care centers,
- schooling before the first grade,
- summer day camps,
- after or before school programs
- or household services for the dependent as well as to run the home (housekeeper, maid, cook, baby-sitter, or cleaning person).
IRS rules state you must provide the tax identification number, name, and address of the provider of the care services. Also you cannot include child support payments, services to a chauffeur or gardener, schooling in or after the first grade, costs for an overnight camp, or costs for clothing or entertainment.
See also Form WS2 - Child/Dependent Care Account Worksheet.
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What are allowable expenses for the Mass Transit Account?
Qualified mass transit transportation up to $115 per month effective in 2008 for mass transit facilities between your residence and place of business. It includes purchase of tickets or transit passes (meaning any pass, token, farecard, voucher or similar item entitling a person to transportation). For example: MetroCards, PATH QuickCards, Commuter Rail Services (MTA, AMTRAK,LIRR, NJ Transit, Metro North), Ferry Services, Commuter Bus Services, etc.
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What are allowable expenses for the Parking Expenses Account?
Qualified parking expenses up to $220 per month effective in 2008 for parking near the business premises of the employer or on or near a location from which the employee commutes to work by mass transit (see above), in a commuter highway vehicle or by carpool. Such expenses would not include any parking used for residential purposes.
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Enrollment
Can I participate in the Flex Plan even if I am not in the group health insurance plan?
Yes, for all accounts except for the Healthcare Premiums account. The Unreimbursed Healthcare account works with any and all health insurance plans.
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How do I get started?
You will be enrolled in the Healthcare Premiums account when you decide upon your group health plan coverage. For all the other optional accounts, first decide on how much you and your family expect to spend for the Plan Year. An enrollment worksheet is available to help you with the Unreimbursed Healthcare and Child/Dependent Care accounts. Then complete the Annual Election Form if you want to set aside pre-tax dollars in the Unreimbursed Healthcare and Child/Dependent Care accounts. If available, complete the Transportation Fringe Account Election Form if you want to set aside pre-tax dollars in the Mass Transit and Parking Expenses accounts. Submit all election forms to your Human Resources contact so that they may setup the first payroll deductions. Your company will provide BSI Administrative Services with a copy so we can prepare confirmation letters and update our records.
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If I miss this enrollment when can I enroll again?
For the Flex Plan (Unreimbursed Healthcare and Child/Dependent Care accounts), once eligible, if you decline to participate or do not submit an election form, then you must wait until the open enrollment period for the next Plan Year unless there is an allowed “change of election.”
For the TFA Plan (Mass Transit and Parking Expenses accounts) there is open enrollment. You can submit a Transportation Fringe Account Election Form (PR7) at any time during.
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If I was not eligible as of the start of the Plan Year, when can I start?
Anyone becoming eligible during a Plan Year may enroll for Healthcare Premiums and Child/Dependent Care accounts when deciding on the group insurance plan coverage. However, for the Unreimbursed Healthcare Expenses, the enrollment periods depend on the plan design specifically for your company. For Mass Transit and Parking Expenses, you can enroll or change your election at anytime during the Plan Year.
See the Key Rules for your plan.
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Do I have to sign up each year?
You must make new elections for the Unreimbursed Healthcare Expenses and Child/Dependent Care accounts. For the Healthcare Premiums, Mass Transit, and Parking Expenses accounts will automatically be continued from year to year if you do not submit a new election form.
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When can I change my elections?
For the Unreimbursed Healthcare Expenses and Child/Dependent Care you must make new elections at the start of each plan year using the Annual Election Form (PR2 and PR2b).
Mass Transit, and Parking Expenses can be changed at any time by submitting a new Transportation Fringe Account Election form (PR7).
Healthcare Premiums will automatically be changed in sync with your enrollment in the group insurance plans provided by your employer.
During the plan year for the Unreimbursed Healthcare Expenses, the IRS rules state that once you make an election, these amounts cannot be changed unless there is a change of family status (birth, adoption, marriage, divorce, separation, death, or dependent being added or leaving your household), change of residence, or if you or spouse have a change of job status (leave of absence, or switching between part-time and full-time), or a significant change of insurance coverage (costs or coverage provided). Then the election changes must be consistent with and necessary or appropriate to the change in status.
During the plan year for the Child/Dependent Care, the IRS rules state that once you make an election, these amounts cannot be changed unless there are a change of costs (fees or hourly rates) or change of program coverage (changing hours or switching day care programs including starting or stopping day care).
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Claims Reimbursement
Will my claims information be kept confidential?
Yes, information provided to BSI Administrative Services, whether in writing or orally or by E-mail, concerning your claims will be kept strictly confidential.
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How do I submit a request for claims reimbursement?
The IRS rules require a written statement and proof of payment Keep original documents for your records, then submit copies directly to BSI Administrative Services, Attn: Flex Plan, 93 Spring Street, Suite 202, Newton, NJ 07860.
Use the Request for Claims Reimbursement Form PR3. Form PR3b - the Claims Reimbursement Instructions provides additional details as to how to complete these claim. For the Mass Transit and Parking Expenses use Form PR8 – the TFA Reimbursement Claims Form. Form 8b – the TFA Claims Reimbursement Form instructions provides additional details as to how to complete these claims. You can call BSI Administrative Services should you have any questions about completing your claims forms.
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Can I use the expenses reimbursed in the Flex Plan as itemized on my tax return as deductions or credits?
No, once you have used expenses in the Flex Plan you may not apply them toward either the itemized deductions or child/dependent care credit.
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Can I be reimbursed for Child/Dependent Care without providing the social security number (or Federal Tax ID)?
No. IRS rules require that you provide the Federal Tax ID. For an individual this is the social security number. In many cases this is the payroll tax ID.
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Can the payments be sent directly to the provider of the service?
Except for the Healthcare Premiums, no. You pay first, then submit a claim for reimbursement. Reimbursements are made payable to you the employee.
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Isn’t the insurance company’s Explanation of Benefits (EOB) sufficient proof of payment?
No, while the insurance company statement will show amounts claimed, amounts the insurance company will pay and amounts you will have to pay, it doesn't show that you did actually pay for the balance not reimbursed by insurance. Remember, you must pay first, then you can get reimbursed.
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Are there any limits to the amount I can be reimbursed?
There are no minimums. Your reimbursements for any account during a Plan Year cannot exceed your annual election for that account.
For the Child/Dependent Care, Mass Transit and Parking Expenses accounts, the amount that may be reimbursed is limited to funds credited via payroll deposits into your account.
For the Unreimbursed Healthcare Expenses, the amounts will be advanced up to your annual election less any reimbursements already made. (Thus, the key is amounts paid by you, not amounts deposited).
Where can I get more claims reimbursement forms?
While you can make copies of all forms, additional forms are available see GET MY FORMS.
Account Balances
How will I know how much is in any of my accounts?
If you want information on a daily basis then call BSI Administrative Services directly. Before we start you will get a confirmation letter showing the proposed payroll deductions. Thereafter, you will get quarterly statements for the Flex Plan (Unreimbursed Healthcare and Child/Dependent Care) as well as a “use it or lose it” reminder along with the statements for the 3rd quarter. For the TFA Plan (Mass Transit and Parking Expenses), you will only an annual statement. These statements will show: balances remaining, payroll deposits, disbursements, and claims pending payment. When your Unreimbursed Healthcare account is paid in full, then you will see a memo item on your reimbursement check.
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What is the IRS "use it or lose it" rule?
For the Unreimbursed Healthcare and Child/Dependent Care, the IRS has ruled that if you don't use the money during the Plan Year, you must lose it -- the "use it or lose it" rule. You'll get reminders before you run out of time, but carefully plan ahead and be conservative in estimating the annual elections. This is less significant for the Child/Dependent Care since you can change elections whenever there is a change of costs or program coverage.
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What happens if I don't use all the money that I have set aside in the Flex Plan?
Any funds lost are applied against the costs of administration. For the Mass Transit and Parking Expenses, the “use it or lose it” rule does not apply; balances are carried over from period to period and year to year.
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Can I transfer moneys between accounts?
No, you cannot move moneys between accounts.
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