Flexible Spending Account
The Flexible Spending Account (FSA) is an option in the Cafeteria Plan. This is a benefit that enables employees of the school district to save tax dollars on payroll-deducted insurance premiums and also set aside dollars to pay for out of pocket medical, dental and vision expenses on a pretax basis. This plan also allows employees to pay for their dependent care expenses on a tax-free basis. This is a free benefit offered to full-time employees of the school district and each year eligible employees have the opportunity to make their own elections for this plan.
The Cafeteria Plan runs on a calendar year basis, January 1st through December 31st of each year. Prior to the start of each plan year, the school district holds their open enrollment period. This is the time period each year that employees can make or change their FSA elections. Most insurance products that are offered to employees of the district are eligible to be run through the Cafeteria Plan. By making the election to have your insurance premiums go through the Cafeteria Plan you are saving federal withholding tax and FICA tax on the cost of that insurance product. In normal payroll situations, an employee's gross pay is subject to federal and FICA tax. But with an FSA and a Cafeteria Plan in place employees are able to pay for their insurance plans prior to taxes being calculated on their income.
Two Spending Accounts Are Offered:
- Flexible Spending Account (FSA) - allows employees to set aside money on a pre-tax basis to be used to pay for the employee and their eligible dependents out of pocket medical, dental and vision expenses for the plan year. During open enrollment each year the employee needs to think ahead about the coming plan year and carefully estimate what they think their out-of-pocket expense will be for that time span. The total amount that the employee estimates is divided by the number of paychecks that the employee receives in a year and that amount is taken out of each check prior to being taxed. Once the plan year begins, the employee will be able to be reimbursed for these types of expenses. To utilize a flexible spending account (FSA) for Healthcare Reimbursement you must enroll each year. If you would like to enroll for 2019, you must go online to mybensite.com/okaloosa. Your FSA may be used to fund your out-of-pocket medical, dental or vision expense with pre-tax dollars. The maximum annual FSA contribution is $2,650 per employee, per plan year.
- Dependent Care Assistance Program - allows for employees to estimate the cost of their dependent care for the coming plan year and pay for it in the same method as the Healthcare Reimbursement Account. To utilize a flexible spending account (FSA) for Dependent Care Reimbursement you must enroll each year. If you would like to enroll or make changes for 2019, you must go online to mybensite.com/okaloosa. The annual amount you can contribute is $5,000 per household, per plan year. As this may impact your ability to take a child tax credit, you may want to consult a tax advisor/professional prior to electing this benefit.
Use It or Lose It
There is a "use it or lose it" rule that is part of the Internal Revenue Services rules that govern how these plans operate, so employees should be cautious when doing their estimate for the year and only set aside money for things they are certain will happen. Once the plan year ends, employees have a 90 day grace period to file claims for that plan year which just ended. The 90 day grace period does not allow you to incur additional expenses for the previous year; it simply allows you to file claims, if you still have a balance remaining in your account. Employees participating in health FSAs will be allowed to carry over - instead of forfeiting - up to $500 of unused amounts remaining at year-end.
Questions or Concerns
If you have any questions regarding your Cafeteria Plan please write or call:
Lockard & Williams Insurance Services, P.A.
P.O. Box 1028
Gonzalez, Florida 32560