By: Tonya Williams, Employee Relations Specialist
School District of Janesville
November 19, 2012 marks the first day of open enrollment for the District’s flexible spending plan that is available to staff who work 20 hours or more per week. This is for the plan year January 1-December 31, 2013. Employees will have through December 10, 2012 to enroll in the plan.
The flexible spending plan is a program that was enacted by Congress in 1978. The plan allows employees to pay for certain expenses using pre-tax dollars. Employees deduct monies from their paycheck before Federal, State (in most states), Social Security and Medicare taxes are calculated. The monies are withheld from each paycheck in equal installments and reimbursed once an employee shows proof that the service was rendered. By using the plan, many people save approximately 20-25 percent in taxes on qualifying expenses.
Many expenses qualify for reimbursement under the flexible spending plan. There are three separate categories depending upon the expense you would like to claim. The Independent Premium Feature allows you to set aside funds pre-tax for an independent policy for either health or dental insurance. Ineligible premiums for reimbursement include: cancer, disability, life, long term care, and any type of group insurance policy. There is no maximum amount when determining an annual election amount for the Independent Premium Feature.
The Dependent Care Reimbursement allows an employee to elect up to $5,000 annually on a pre-tax basis for dependent care expenses for children under the age of 13 as well as certain preschool tuition. You should consult with your tax advisor to determine whether you receive a better tax benefit by using the flexible spending plan versus the federal dependent care tax credit at year-end.
The Medical Reimbursement allows an employee to elect up to $2,500 annually on a pre-tax basis for out-of-pocket medical expenses. These expenses may include but are not limited to insurance deductibles, glasses, office visit co-pays, prescription drug co-pays, and dental work. A list of medical services that can be reimbursed are included in the enrollment packet.
When you elect an amount at the beginning of each plan year, you must define the amount of expense in the area of the Independent Premium Feature, the Dependent Care Reimbursement or the Medical Reimbursement. The Medical Reimbursement, however, allows for flexibility within the account. For example, if you set aside money for glasses and end up having an unexpected dental expense, you are able to use Medical Reimbursement funds for the dental expense. Please keep in mind that if you do not use all of the monies set aside by the end of the plan year, you will lose it.
District staff should look for an email on November 19 with the enrollment packet attached. The packet will include information about flex spending itself and the enrollment form. If you have questions regarding open enrollment for flexible spending, please contact Tonya Williams at 743-5021.