Questions & answers

Section 125 Flexible Benefit Plan
Questions & Answers

Q.
How do I enroll in the Section 125 Flexible Benefit Plan?
An enrollment form must be completed during annual enrollment reflecting the elections you wish to shelter under the plan. How often may changes be made to my election?
The Plan allows a participant to make elective contribution changes at each annual enrollment. Changes during the plan year are subject to the Internal Revenue Code Section 125 regulations and the Plan Documents. Specifically, allowable changes during the plan year must be made as a result of a status change. Please note that election changes must be consistent with the status change (e.g. the birth of a child would effect dependent benefits but not dental benefits). What events are considered changes in status?
Status changes include marriage, birth, death, divorce, changes in a spouse’s or dependent’s employment status, or a change from part-time to full-time status or from full-time to part-time status by the employee or the spouse. Other status changes include termination of employment, lay off, unpaid leave of absence, return from leave of absence, or retirement. In addition, the significant change in cost or coverage to a participant’s health insurance may be an allowable elected deduction change. Whose expenses are eligible for reimbursement under the Medical
Expense Reimbursement Fund?
Eligible medical expenses include expenses incurred for the participant, the participant’s spouse or the participant’s qualified dependents that have not been and will not be reimbursed by any medical insurance, dental insurance or any other source. This includes expenses that are primarily for the prevention or treatment of a physical or mental defect or illness. What types of expenses are eligible for reimbursement under the
Medical Expenses Reimbursement Plan?
What are the most common ineligible medical expenses?
Cosmetic procedures, Health Club Dues, Marriage Counseling, Prescriptions used for cosmetic purposes only, such as Rogaine Is there a maximum amount that I can contribute to the Medical
Expense Reimbursement Plan?
You may allocate up to $10,000 per year for reimbursement of health care expenses. The maximum is set by your employer. Section 125 Flexible Benefit Plan Q & A Whose expenses are eligible for reimbursement under the Dependent
Care Assistance Plan?
Qualified dependents include children under age 13 or a spouse or dependent that is physically or mentally unable to care for him/herself. The dependent must be someone you claim as a dependent on your income tax return. The expense must be incurred in order for that participant (and the spouse if applicable) to work or look for employment. What types of expenses are eligible for reimbursement under the
Dependent Care Assistance Plan?
Care of a qualifying person only if their main purpose is the person’s well being and protection. Care outside your home if the dependent regularly spends at least eight hours each day in your home. What are the most common ineligible Dependent Care expenses?
Overnight Camp, Transportation Cost, Entertainment, Educational Expenses Is there a maximum amount that I can contribute to Dependent Care?
You may allocate up to $5,000 per year for reimbursement of dependent care expenses ($2,500 if you are married and file a separate return). This maximum is set by the IRS. Can I submit a claim for more than what I have “built-up” in my
account(s)?
Yes, for the Medical Reimbursement Account you can submit claims up to the full annual election. No, for the Dependent Care Account, the requested claim cannot exceed the amount in your account. How long does it take to get a reimbursement?
Claims are processed within five working days and checks are issued on a daily basis. Can I fax claims in for processing or do I have to mail them in?
Claims can be mailed or faxed for processing. If faxed there is no need to mail the hard copy. Who are checks made payable to and whom are they mailed to.
Checks are always made payable to the participant and are mailed directly to the participant’s home. What is the “use-it-or-lose-it” rule?
A cafeteria plan may not allow employees to carry over unused elective contributions or plan benefits from one plan year to another. But the IRS is allowing plans to add a grace period to their plans. The Southwestern University plan year runs from January 1, 2011 through December 31, 2011. The extended grace period for incurring Health Care and Dependent Care expenses has been extended to March 15, 2012. The deadline for filing all claims will be April 30, 2012. Unused contributions or benefits will be forfeited if not claimed within the limits set by the plan. For example, suppose that an employee elects to allocate $2,000 to a medical expense reimbursement plan for the plan year and incurs only $1,400 in eligible expenses during the year and the extended grace period. The employee forfeits the unused $600.00. It may not be carried over to the next plan year.

Source: http://www.southwestern.edu/hr/documents/2011Benefits/CafeteriaPlan_Q-A.pdf