BENEFLEX INC. Leading the way in FSAs flexible spending accounts made simple THERE ARE TWO TYPES OF FLEXIBLE SPENDING ACCOUNTS Dependent care flexible spending accounts Medical flexible spending accounts BOTH TYPES SAVE THE EMPLOYEE AND THE EMPLOYER MONEY! THE BASICS
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Leading the way in FSAs
flexible spending accounts made simple
BOTH TYPES SAVE THE EMPLOYEE
AND THE EMPLOYER MONEY!
A Flexible Spending Account allows an employee to convert a taxable benefit (their salary) into nontaxable benefits. When an employee contributes to a spending account, they lower their Federal, Social Security and in some cases, State taxes and increase their spendable take-home pay! The higher the tax bracket, the more they can potentially save.
By using TAX FREE dollars to pay for necessary qualified expenses, employees increase their spendable income and save taxes.
Let’s start with the dependent care spending account . . .
The DEPENDENT CARE SPENDING ACCOUNT is governed by a Federal tax law that allows employees who require daycare for their dependents, in order to work, to pay up to $5,000.00 of qualified childcare or eldercare expenses with money from their paychecks BEFORE any taxes are removed.
Eligible Dependents Include:
Because we keep it simple for both employers and employees
You would think that employees would jump at the chance to pay $5,000 worth of daycare or eldercare expenses on a tax-free basis and have $1,800.00 or more spend able income per year. Unfortunately, most dependent care spending accounts are as much a burden on employees as they are a benefit. The normal burden associated with the plan creates a low participation rate from employees.
Due to low participation rates by employees, due to the hassle of saving receipts and waiting to be reimbursed, EMPLOYERS often ignore dependent care FSAs and fail to offer a benefit that actually SAVES them money.
BENEFLEX is the FSA plan that simplifies dependent care spending accounts, increases employee participation and SAVES THE EMPLOYER MONEY!
Parents usually live from paycheck to paycheck.
The typical plan requires that the money is deducted from the employees check but before the employee has access to their money they must pay their provider, obtain a receipt, turn the receipt into the administrator and wait to be reimbursed. Reimbursement can take up 3 to 4 weeks. Meanwhile, the employee is paying double daycare.
Where was the benefit in this?
We don’t believe there was a benefit because the typical employee simply can not afford to participate.
The Beneflex "IRS approved" direct-pay system eliminates the hassles employees normally have to commit to in order to participate.WE PAY THE DAYCARES DIRECT!
Employees have no weekly checks to write to daycares
No Receipts to keep
The same week money is deducted from their paycheck, their daycare is paid directly from Beneflex!
BEST OF ALL
THERE IS NO WAITING TO BE PAID BACK
It’s as simple as 1 - 2 - 3
The employee elects to participate and chooses the amount that their
salary is reduced each pay period
2. The employer sends the funds to Beneflex
Beneflex pays the daycare provider directly the same week the employees
salary is reduced
Employees can now afford to participate !
We prefer to pay via electronic funds transfer so that the provider is guaranteed that their payment is in their checking account Friday of each week or if paid monthly, the 1st Friday of the month.
We also pay by check if requested. Checks are mailed on Friday of each week. However, this method leaves the provider at the mercy of the postal service.
The $5,000 breakdown
Often, an employees daycare exceeds $5000 per year. Beneflex allows employers to deduct and send the amount above $5000 on a post-tax basis. This allows BENEFLEX to pay the daycare
the total amount required and saves the employee the trouble of writing a check for any extra amounts needed.
THERE IS NO CHARGE FOR THIS EXTRA FEATURE
Employees NEED this benefit!
With Our Plan $3000 Gross Wage
Taxable Daycare $416.00
Non-Taxable Daycare $416.00
Taxable Wages $3,000
Taxable Wages $2,584.00
Taxes Deducted (35.65%) $1,069.50
Taxes Deducted (35.65%) $921.20
Take-Home Pay $1,930.50
Take-Home Pay $1,662.80
Daycare not yet paid $416.00
Daycare already paid
Spend able Take-Home Pay
Spend able Take-Home Pay
LACK OF EDUCATION EQUALS
LACK OF ENROLLMENTS
The employee has $148.30 more spendable income each month
which is a yearly increase of $1,779.60
They earned it…they might as well keep it!
happy employees with more spendable income
The employer enjoys a savings equal to 2% of the redirected amounts through reduced payroll taxes!
The employer does not have to pay the matching FICA taxes on the Dependent Care Assistance Program funds redirected by its employees. Since our administrative cost is only 5.65%, the employer has a 2% savings of the funds redirected by its employees.
The benefit employers can no longer afford to ignore !
From the employee's point of view it's nearly impossible to find a health plan that covers all costs. There will undoubtedly be expenses that are covered only partially or not at all.
Co-pays and deductibles add up fast !
These needs led to the birth of Medical Flexible Spending Accounts (MedFSA's), established under Section 125 of the Internal Revenue Service Code. When an employee contributes to a MedFSA, they lower their Federal, Social Security and in some cases state taxes and increase their spendable income
The higher the tax bracket, the more they can potentially save.
too many things to list on this presentation . . .
The employer sets the minimum & maximum limits
"Use it or lose it." This means that if an employee elects $500 in the health FSA, for example, and only uses $450 and does not use the remaining $50, this is forfeited to the employer. This is inherent in group insurance policies. If you are enrolled in a medical policy and do not use it in the policy year, you are not given a refund. Why? For the price of the premium you transferred your “risk” of illness to the insurance company. So it is with a MedFSA. Your election is your premium and any risk is shifted to the employer. In reality there is little risk of losing money if the employee sets aside money for expenses that he is sure to use.
"Availability" rule. Example, when an employee enrolls in a health FSA, in the amount of $600 and has a claim of $300 at the beginning of the plan year, the employer is required to make available" the $300. Since, the employer, by offering a MedFSA is acting as an insurance company by "fronting" these dollars, the employer is also entitled to any forfeitures. Some employers are concerned about this possible exposure. Because, at the beginning of the plan year several employees could draw down the employee pool of MedFSA dollars and the employer would have to make up the difference in the pool. This is a temporary experience and is rapidly made up by continuing payroll deductions.
The medical expenses only have to be incurred to be reimbursed
A Flexible Spending Account allows an employee to convert a taxable benefit (their salary) into nontaxable benefits.
For every dollar the employees run through a MedFSA plan, the employer saves the 7.65% FICA tax (Social Security). For example, if after enrolling in a MedFSA plan, the employees collectively moved $100,000 pretax, the employer would save $7,650.00 Since Beneflex only charges $5.00 per participant per month (reduced to $4.00 if they are offering the Dependent Care Benefit), the FICA savings can easily be figured to cover the fee by employers setting a minimum and maximum contribution to the plan.
If your employees are paying too much in taxes, then so is your company.
We are as paperless as the law allows
Use Beneflex Flexible Spending Accounts
You’ll Be Happy You Did !