The Office of Human Resources has announced new enhancements to the University’s flex-spending plans for active faculty and staff, effective Jan. 1. The improvements include a triple-option payment method for employees’ out-of-pocket health and child-care expenses and online access to flex-spending account balances.
The triple-option payment method includes: 1) a VISA debit card that may be used for health flex-spending expenses only; 2) paying a provider for health or child-care flex-spending expenses through a regular monthly payment; and 3) reimbursing employees by check or direct deposit for paper or faxed claims submitted for health and child-care flex-spending expenses.
Also, employees will have the opportunity to go online to verify their current flex-spending account balances in addition to receiving a monthly statement by e-mail or U.S. mail.
Another change to the flex-spending plans is the adoption of a grace period for incurring out-of-pocket expenses after the calendar or plan year. Specifically, employees may incur flex-spending expenses through March 15, 2007, that may be applied to their remaining balances for calendar year 2006.
Due to the new grace period, the deadline for submitting claims for 2006 flex-spending expenses will be extended to April 30, 2007.
Active faculty and staff wanting to save money on out-of-pocket health and/or child-care expenses may enroll in the University’s flex-spending plans for calendar year 2007 during the open-enrollment period, which runs through Nov. 30.
The advantage of flex-spending plans is that they allow employees to avoid paying federal, state and Social Security/Medicare taxes on money specifically set aside from their paychecks for the spending accounts.
The annual limit is $5,000 per employee for the health-care flex-spending plan and $5,000 per family for the child-care flex-spending plan. Employees can enroll in either plan or both.
All interested employees — including those enrolled for 2006 — must enroll before the Nov. 30 deadline to ensure participation.
Expenses not covered by health, dental, prescription-drug or vision benefits, plus over-the-counter medications, can be reimbursed from the pre-tax health-care spending account.
Examples of some qualifying expenses include: deductibles, co-insurance, office visit co-pays, prescription drug co-pays, hospital emergency room co-pay, LASIK surgery, non-covered prescription drugs, eyeglasses, contact lenses and hearing aids.
Child-care expenses include services provided by a licensed day-care center, pre-school or babysitter. To be eligible, this service must be rendered for the sole purpose of allowing a single parent, both spouses of a married couple, or both a parent and domestic partner to work or to seek an education on a full-time basis.
“Our employees who are enrolled in these plans enjoy a definite tax savings, a current tax savings that won’t be deferred or paid later like our retirement savings plan,” said Tom Lauman, director of benefits in human resources. “With the new payment options including the debit card, employees have an easier and more convenient way to save taxes on their flex-spending expenses.”
There are limitations and forfeiture rules to consider when enrolling in these plans. Once enrolled, employees cannot change or cancel their contributions during that year unless they experience a family-status change, such as marriage, divorce, legal separation or birth or adoption of a child, or their spouse ends or begins employment or has health open enrollment through their employer.
“We encourage those interested to review the open-enrollment brochure carefully,” Lauman said. “We also caution employees to be very conservative and budget only for known or planned expenses for the next year to avoid forfeiture of their remaining balances.”
Those currently participating in the plans for 2006 should expend their remaining balances by March 15 and submit a claim form and receipts to the Epoch Group to avoid forfeiture.
Those enrolling for 2007 will receive a welcome kit from the new administrator, WageWorks, in December that will include their debit card and detailed instructions about the triple-option payment methods and online access.