Section 125 Plan Flexible Benefit Plan Overview

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view1. Flexible Benefit Plan Overview 2.
Pre-Tax Group Insurance Premiums3. Dependent
Care Reimbursement Account4. Medical
Reimbursement Account5. How to File a
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Section 125 PlanFlexible Benefit
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Section 125 PlanFlexible Benefit PlanOverview
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What is a Flexible Benefit Plan?
The intent of this slide presentation is to
provide a brief overview of the Flexible Benefit
Plan (Flex Plan). Please see your employers
Plan Document for details of the Flex Plan rules
and regulations before participating in the
program.
What is a Flexible Benefit Plan?
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What is a Flexible Benefit Plan?
Welcome to an overview of the Section 125
Flexible Benefit Plan (Flex Plan)! Flex Plans
are an excellent way to increase your spendable
income and reduce your federal and FICA taxes
(and in most states, your state income
taxes). Diversified Benefit Services, Inc. (DBS)
is the third party administrator of your
employers Flex Plan. DBS is located in Hartland,
Wisconsin and has administered these plans since
1987.
What is a Flexible Benefit Plan?
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What is a Flexible Benefit Plan?

• Its a tax reduction plan for employees!

Legislation creating these plans was enacted by
Congress in 1978.
The regulations are recorded in Section 125 of
the IRS Code.
What is a Flexible Benefit Plan?
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What is a Flexible Benefit Plan?

• Under Section 125 of the IRS Code, you as an
• employee, can pay for qualified expenses
• using money from your paycheck that is deducted
• pre-tax.

By using pre-tax dollars, you reduce the amount
you pay in taxes!
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What is a Flexible Benefit Plan?
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What can a Flex Plan do for you?
By eliminating Federal and FICA tax (and
possibly state tax) on qualifying expenses, the
plan saves the average participant approximately
15-30 in taxes on those expenses.
It can increase the amount of your paycheck that
you get to keep!

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What is a Flexible Benefit Plan?
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The Benefit Categories

• There are three main categories of expenses that
  qualify for pretax reimbursement.
• Group Insurance Premiums
• Dependent Care Reimbursement Account
• Medical Reimbursement Account
• The details of these categories are described in
  the other presentations on this website.

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What is a Flexible Benefit Plan?
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What does pre-tax mean?

• You earn what is called
• gross pay. This refers to the amount your
  employer pays you.
• However, this is not what most people get to
  spend from their paycheck. Why?
• Because the government takes a percentage of your
  gross pay first (in the form of taxes).

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What is a Flexible Benefit Plan?
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What does pre-tax mean?

• With the Flex Plan, the government allows you to
  set aside a portion of your gross pay to cover
  certain expenses before a percentage of it is
  deducted in taxes.
• The remainder of your paycheck is what the
  government declares subject to taxes.
• By deducting pre-tax monies, you pay less in
  taxes!
• The chart on the next slide illustrates this
  concept.

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What is a Flexible Benefit Plan?
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Paycheck Comparison

• Insurance Premiums
• Dependent Care
• Medical, Dental, Vision expense
• (Total of I, II, III 268)

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What is a Flexible Benefit Plan?
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Does the Flex Plan affect my Social Security
retirement benefits?

• The Flex Plan may affect your Social Security
  retirement benefit as you are lowering the amount
  of your income from which you contribute Social
  Security taxes.
• For most people, the effect is minimal.
• Visit the Social Security Administration website
  at www.ssa.gov if you have questions on how to
  calculate retirement benefits.

What is a Flexible Benefit Plan?
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Expenses must be incurred in the Plan Year

• The Plan Year is the time frame your employers
  plan is administered.
• It is important that any expenses you submit for
  reimbursement are incurred within the Plan Year.
• This means the dates of service (when the service
  was rendered) must fall within the Plan Year.

What is a Flexible Benefit Plan?
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In Summary

• Flex Plans are a great way to increase your take
  home pay.
• Please review the other presentations to learn
  more about the plan.
• Ask your employer how you can enroll in the plan
  and start reducing your taxes!

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What is a Flexible Benefit Plan?
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Additional questions?
Diversified Benefit Services, Inc. Customer
Service Representatives are available Monday
Friday 830 a.m. 500 p.m. (CST)
1- (800)-234-1229 1- (262)-367-3300
What is a Flexible Benefit Plan?
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Section 125 PlanPre-tax Premium Overview

• For Employer Sponsored Group Insurance Premiums

Pre-Tax Premium
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What is a Flexible Benefit Plan?
The intent of this slide presentation is to
provide a brief overview of the Pre-tax Premium
area of the Section 125 Flexible Benefit Plan
(Flex Plan). Please see your employers Plan
Document for details of the Flex Plan rules and
regulations before participating in the program.
Pre-Tax Premium
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I. Group Insurance Premiums
Under the Section 125 Plan, group insurance
premiums you pay from your paycheck through your
employer for health (or other qualified group
insurance premiums) may be deducted from your
paycheck with pre-tax dollars.

• Under

• This will be done automatically by your employer
  through regular payroll deductions.

Pre-Tax Premium
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I. Group Insurance Premiums

• Your insurance contributions are sent by your
  employer to the insurance company on your behalf.

• By paying for your group insurance premiums
  pre-tax, you save approximately 15-30 in taxes.
  
• The chart on the next slide illustrates this
  concept.

Pre-Tax Premium
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Pre-tax Illustration

• Pre-tax After-tax
• Gross Pay 1,000 1,000
• Pre-tax Group Insurance - 100 - 0
• Taxable Income 900 1,000
• Taxes (assume 25) - 225
  - 250
• 675 750
• After-tax Group Insurance 0
  - 100
• Take Home Pay 675 650
• Increased Take Home Pay 25

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Pre-Tax Premium
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I. Group Insurance Premiums

• With this area of the Section 125 Plan, there is
  nothing you need to do.

• There are no forms to complete.
• The monies will not show up on your W-2 form as
  taxable income.

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Pre-Tax Premium
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Additional questions?
Diversified Benefit Services, Inc. Customer
Representatives are available Monday Friday
830 a.m. 500 p.m. (CST)
1- (800)-234-1229 1- (262)-367-3300
Pre-Tax Premium
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Section 125 PlanDependent CareReimbursement
Account
Dependent Care
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What is a Dependent Care Reimbursement Account?
The intent of this slide presentation is to
provide a brief overview of the Dependent Care
Reimbursement Account area of the Section 125
Flexible Benefit Plan (Flex Plan). Please see
your employers Plan Document for details of the
Flex Plan rules and regulations before
participating in the program.
Dependent Care
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Dependent Care Reimbursement Account (DCRA)

• This category allows you to pay for qualified
  dependent care expenses for dependents on a
  pre-tax basis.

• With the DCRA, you set aside a conservative
  amount of monies pre-tax for your dependent care
  expenses.

• The monies are reimbursed to you after you submit
  a claim validating your expense showing services
  have been performed.
• By using the account, you save approximately
  15-30 in taxes on your expenses!

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Dependent Care
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Dependent Care Reimbursement Account (DCRA)

• The services must be performed within the program
  Plan Year to qualify.

• You must report the care providers Federal Tax
  Identification or Social Security number on your
  tax returns in order to use this category.

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Dependent Care
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Who is a Qualified Dependent?

• A dependent on your Federal income taxes for the
  year in which you are filing for reimbursement
  under the plan and

• A dependent under the age of 13 who you can claim
  as an exemption or your spouse, parent or child
  who is unable physically or mentally to care for
  himself/herself and

• A dependent that spends at least eight hours per
  day at your residence and lives at your residence
  at least 6 months of the year.

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Dependent Care
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Dependent Care Reimbursement Account

• To qualify, the care must be for services that
  allow you (and your spouse, if youre married) to
  be gainfully employed or to attend college on a
  full-time basis or seek employment during the
  hours your dependent is with the care provider.

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Dependent Care
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What is the Maximum I Can Contribute?

• If you are single (or married filing a joint
  Federal tax return), you may contribute up to
  5,000 (not to exceed 5,000 in any given
  calendar year per family). You are limited to the
  amount of your annual earnings if you or your
  spouse earns less than 5,000 in a calendar year.
• If you are married but filing separate tax
  returns you are limited to the lesser of 2,500
  or your earned income.

Dependent Care
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What is the Maximum I Can Contribute?

• If you or your spouse are a full-time student,
  not working, and have one child in daycare, you
  may contribute 3,000.
• If you or your spouse are a full-time student,
  not working, and have two or more children in
  daycare, you may contribute 5,000.
• The maximums listed in the previous slides are
  per family maximums not to be exceeded in any
  given calendar year.

Dependent Care
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How does the DCRA work?

• Estimate your cost during the Plan Year.

• The maximum annual per family deduction allowed
  by IRS in most cases is 5,000.

• Authorize your employer to deduct this amount
  from your paycheck in equal installments
  throughout the Plan Year.

• Submit claims to DBS for reimbursement as you
  incur expenses.

Dependent Care
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How does the DCRA work?

• DBS reviews your claim and reimburses you
  directly for your expenses.
• With dependent care expenses, you can only be
  reimbursed the dollar amounts that have been
  deducted from your paycheck as of the date of
  your claim.
• Always submit the total amount of dependent care
  expenses incurred (even if you have not had that
  much deducted from your paycheck).

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Dependent Care
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How does the DCRA work?

• The excess amount claimed will be entered into a
  pending account.
• The pending amounts will be reimbursed after
  your payroll deductions are credited to your
  account.

Dependent Care
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Dependent Care Reimbursement Account

• An alternative way to save on dependent care
  expenses is by taking a tax credit when you file
  your income tax return.

• The tax credit is based on your adjusted gross
  income. As your income goes up, the percent of
  credit you receive on your expenses goes down.

• You should ask your tax advisor which method is
  best for you. DBS does not provide tax advice.

• You may not use the same expenses for both the
  Flex Plan and the Tax Credit.

Dependent Care
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Dependent Care Reimbursement Account

• You must file Federal Tax Form 2441 with your
  income taxes if you participate in the DCRA.

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Dependent Care
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Important Note

• The Dependent Care Reimbursement Account and the
  Medical Reimbursement Account are separate
  categories.

• Pre-tax dollars from one account may not be used
  for expenses in the other account.

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Dependent Care
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What happens if I dont use all my DCRA money?

• By Federal law, unused monies are forfeited at
  the end of the Plan Years run-out period.
• Because of this rule, you need to plan
  conservatively.
• For most people, it is easy to estimate the
  amount for the DCRA as they spend the same amount
  each week on dependent care.
• Note Most people do not leave any money in this
  account.

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Dependent Care
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In Summary

• The DCRA is an excellent way to reduce your
  taxes.
• Consult your tax advisor to see if this account
  can benefit you.
• Please review the other presentations to learn
  more about the plan.
• Ask your employer how you can enroll in the plan
  and start reducing your taxes!

Dependent Care
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Additional questions?
Claim forms may be downloaded from our
website. Diversified Benefit Services, Inc.
Customer Service Representatives are available
Monday Friday 830 a.m. 500 p.m. (CST)
1- (800)-234-1229 1- (262)-367-3300
Dependent Care
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Section 125 PlanMedical Reimbursement Account
Medical Reimbursement Account
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What is a Flexible Benefit Plan?
The intent of this slide presentation is to
provide a brief overview of the Medical
Reimbursement Account area of the Section 125
Flexible Benefit Plan (Flex Plan). Please see
your employers Plan Document for details of the
Flex Plan rules and regulations before
participating in the program.
Medical Reimbursement Account
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Medical Reimbursement Account

• This category allows you to pay for your (and
  your legal dependents) qualified medical,
  dental, vision, and other eligible expenses on a
  pre-tax basis.

• The expenses need to be for out-of-pocket
  expenses that are not reimbursed or paid for by
  any other sources.
• The services must be performed within the Plan
  Year (meaning dates of service must be within the
  Plan Year).

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Medical Reimbursement Account
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What expenses qualify in the Medical
Reimbursement Account?

• Eligible Out-of-Pocket Expenses Include
• Medical insurance deductibles, co-pays and
  co-insurance
• Dental insurance deductibles and co-insurance
• Dental expenses such as exams, caps, crowns,
  bridges fillings
• Orthodontia
• Vision exams, glasses, frames, contact lenses
  supplies
• Laser eye surgery
• Hearing aids (including batteries)
• Routine exams/physicals/mammograms
• Chiropractor costs
• Prescription drugs
• Mileage for medical care

Medical Reimbursement Account
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Medical Reimbursement Account

• Expenses which are NOT eligible include
• Surgery for cosmetic reasons
• Breast pump rental
• Medical supplies that are not medically necessary
• Teeth bleaching/whitening/bonding
• Health club membership dues
• Over-the-counter vitamins and other dietary
• supplements for general health purposes
• Cosmetic drugs
• Marriage counseling
• Group insurance premiums deducted from your
  paycheck

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Medical Reimbursement Account
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How does the Medical Reimbursement
Account work?

• Estimate your familys out-of-pocket cost for
  qualified medical expenses during the Plan Year.
• Ask your Human Resources department for the
  medical maximum
• that is allowed for the Plan Year.
• Authorize your employer to deduct this amount
  from your paycheck in equal installments
  throughout the Plan Year.

• Submit claims to DBS for reimbursement as you
  incur expenses.

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Medical Reimbursement Account
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How does the Medical Reimbursement Account work?

• DBS verifies the expense based on IRS guidelines
  and reimburses you directly. Note other methods
  for accessing your account may be in place at
  your employer.
• Reimbursement is NOT limited to the current
  account balance. Your entire annual election is
  available for reimbursement when you incur the
  expenses.
• Monies in the Medical Reimbursement Account can
  be used for any expense that qualifies within the
  category. For example, money set aside for your
  glasses can be used for your childs dental care.

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Medical Reimbursement Account
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Benefits of the Medical Reimbursement Account

• Tax-free money you save approximately 15-30
  in taxes.
• Flexible use the money anywhere within the
  category.
• Ability for reimbursement of the full Plan Year
  amount if expenses are incurred early in the Plan
  Year.

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Medical Reimbursement Account
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What if I dont use all my money?

• According to the Federal rules, unused money is
  forfeited at the end of the Plan Year, if all
  claims are not submitted during the run-out
  period.
• However, most people do not leave money in the
  plan because
• they only set aside money for predictable
  expenses.
• they submit their smaller expenses for items
  such as diabetic supplies, contact lens saline
  solution, and medical mileage, to use up their
  monies.

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Medical Reimbursement Account
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Can I claim the expenses in the Medical
Reimbursement Account from my income taxes?

• No, the expenses reimbursed under the Medical
  Reimbursement Account cannot be used toward
  Medical Itemization (Schedule A) on your Federal
  Tax return.

• Consult your tax advisor to see which method
  benefits you most.

• DBS does not provide tax advice.

Medical Reimbursement Account
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Important Note

• The Dependent Care Reimbursement Account and the
  Medical Reimbursement Account are separate
  categories.

• Pre-tax dollars from one account may not be used
  for expenses in the other account.

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Medical Reimbursement Account
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In Summary

• The Medical Reimbursement Account is an excellent
  
• way to reduce your taxes.
• Consult your tax advisor to see if this account
  can
• benefit you.
• Please review the other presentations to learn
  more
• about the plan.
• Ask your employer how you can enroll in the plan
• and start reducing your taxes!

Medical Reimbursement Account
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Additional questions?
Claim forms may be downloaded from our website.
Diversified Benefit Services, Inc. Customer
Service Representatives are available Monday
Friday 830 a.m. 500 p.m. (CST)
1- (800)-234-1229 1- (262)-367-3300
Medical Reimbursement Account
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Filing a Section 125Flexible Benefit Plan Claim
How to File a Claim
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Overview for Claim Filing and Reimbursement

• Incur your medical, dental, vision, dependent
  care and other expenses as you normally would.
• As you incur expenses, save documentation from
  the service providers that verifies your
  expenses.
• At any time during the Plan Year, you may choose
  to submit your expenses for reimbursement.
• Complete a 125-FSA Claim Form and submit it to
  DBS, Inc. with copies of your documentation.
• DBS, Inc. substantiates the claim and reimburses
  you for your expenses.

How to File a Claim
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Completing the 125-FSA Claim Form

• Make sure to complete and sign the top section of
  the 125-FSA Claim Form by printing your full
  name, e-mail address (if you have one), name of
  your employer and your participant ID number
  (assigned by DBS, Inc.) or Social Security
  number.

• In addition, complete Dependent Care
  Reimbursement Account box for your dependent care
  expenses and/or the Medical Reimbursement Account
  box for your medical, dental, and vision type
  expenses.
• Claim forms may be mailed or faxed to DBS, Inc.
  The address and fax number are shown on the form.
• The next slide illustrates how to complete the
  claim form.

How to File a Claim
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Claim Form 125-FSA Example
Claim Form
Jon Doe
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Diversified Benefit Services, Inc.
How to File a Claim
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Claim Form Dependent Care Section
Show the amount of expense incurred, the care
provider name and Social Security or Federal tax
ID number, and the dates during which you
incurred the expense. NOTE you can only claim
services that have been performed. If a
representative of the care provider signs the
form, a receipt does not have to be included with
your claim.
How to File a Claim
Diversified Benefit Services, Inc.
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Claim Form Medical Reimbursement Section
Along with your claim form, include copies of
your insurance EOB forms or itemized bills, that
show the date(s) of service, the amount of your
out-of-pocket expense, the name of the Provider
and the type of expense. Retain the originals
for your records.
How to File a Claim
Diversified Benefit Services, Inc.
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Types of documentation
Always submit copies of your expense
documentation. Keep the originals for your
records. For the Medical Reimbursement
Account, your documents must show 1) The type
of expense 2) The date of service not billing
date 3) Name of the service provider 4) Your
out-of-pocket cost for the expense Examples
of proper documentation to submit
include Explanation of Benefits forms (EOBs)
from insurance companies Dental or vision
invoices showing the above items (not balance
forward statements) Drug copay slips from the
pharmacy

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How to File a Claim
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Where do I submit claims?
Submit your signed Claim Form and expense
documentation to

Diversified Benefit Services, Inc. P.O. Box
260 Hartland, WI 53029 Or fax claims to 1-
(262)-367-5938

How to File a Claim
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Other Claims Information

• Claims must be for services rendered during the
  Plan Year.
• Claims must be submitted by the end of the claims
  run-out period after the end of each Plan Year.
• All claims are confidential and will only be seen
  by a DBS representative.
• You may submit claims as you incur expenses or
  submit a claim with multiple expenses and
  multiple dates of service.
• Filing a claim is easy!
• Using the Plan saves you approximately 15-30 in
  taxes on your expenses.

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How to File a Claim
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Additional questions?
Claim forms may be downloaded from our
website. Diversified Benefit Services, Inc.
Customer Service Representatives are available
Monday Friday 830 a.m. 500 p.m. (CST)
1- (800)-234-1229 1- (262)-367-3300
How to File a Claim