Common Questions about Blue Priority Flex
What’s the benefit of offering a flex plan?
Flexible spending accounts encourage your employees to take a more active
role in their health care choices — with the benefit of tax savings.
Flex plans are a win-win for employers and employees: they reduce your
payroll taxes and offer your employees a way to save on health expenses
and dependent care.
How do flexible spending accounts (FSAs) work?
Employees estimate their out-of-pocket medical and dependent care expenses
each plan year to determine an amount to deposit to their flex accounts.
The amount is payroll deducted in equal amounts throughout the year,
before taxes are calculated.
What IRS rules apply to my flex plan?
Here are some common compliance rules for flex plans:
- Employees must elect separate amounts for each reimbursement account
before the plan’s effective date.
- Enrollment elections must be
completed prior to the start of each plan year.
- Expenses must be incurred
during the plan year to be eligible.
- Employers can elect a grace period after the end of the plan year
for participants to incur claims for the year.
- Employee contributions remaining
after the filing deadline for a plan year are forfeited by the participant.
Excess funds are retained by
the employer.
- Employees in a medical reimbursement account are eligible to receive
up to their total annual election before all the funds have been payroll
deducted.
- Employee elections can not be changed during the plan year
unless they are justified by a change in status, event, or cost of
coverage.
- Plans can not discriminate in favor of owners and/or highly
compensated employees with respect to eligibility or benefits.
How does Wellmark help with employee enrollment and education?
Education promotes greater employee acceptance of flexible benefit programs.
Wellmark offers materials and support to help employees learn how to
benefit most from their flex account. Wellmark prepares enrollment
materials describing your plan, including benefit brochures, enrollment
forms, and related materials. Flex benefit specialists also can conduct
worksite meetings to explain your plan provisions and answer any questions.
Online decision-making
tools help employees
to learn more about flex plans, plan contributions, and estimate tax
savings.
When can employees change their elections?
Employees may request an election change if they incur a qualified
family status change,
such as marriage
or adding a dependent. Other changes are permitted related to changes
in cost and/or coverage in some cases.
Do all flex plans follow the calendar
year?
Although flex plans that follow the calendar year are popular,
your flex plan can match your fiscal year, bargaining contract,
or benefits anniversary.
A plan year can be less than 12 months, but never longer than 12 months.
What
is a grace period?
Employers may allow participants a grace period of up
to an additional 2 ½ months following the end of the plan
year to incur claims for that year. This helps participants avoid
forfeiting
unused contributions at year end. If a grace period is not selected,
a claims run-out period follows the end of the plan year.
What happens to employee forfeitures?
Any employee contributions remaining after the end of the claims
run-out period are retained by the employer. These funds can
be used to offset
any administrative expenses, but may not be used to directly repay
employees who experience forfeitures. Can I offer both a flexible benefits plan and health savings account?
Your employees can not use both a flexible spending account and
health savings account (HSA) to pay for health care costs. However,
you can
offer an HSA with a limited-purpose
flex account that restricts reimbursements to qualified vision
and dental expenses.
Can part-time employees participate
in a flex plan?
You have control in defining certain plan provisions, such as offering
reimbursement accounts to employees not covered by your health benefit
plan. Flexible benefit plans must be offered in a non-discriminatory
manner. Can new employees join the flex plan during the year?
Like eligibility, you have flexibility in defining when employees
become eligible to participate in your flexible benefits plan.
Are owners eligible
to participate?
Owners of “C” corporations, including spouses, children,
grandchildren, and parents employed by the company, may participate in
flexible benefit plans. Owners of Subchapter “S” corporations,
partners in a partnership, Limited Liability Companies (LLCs), and sole
proprietors can offer flex benefits to their employees, but are not eligible
to participate. What are non-discrimination rules?
Flexible benefit plans enjoy favorable tax treatment under IRS Code.
Highly-compensated or key employees (owners) may not be eligible
to participate if the
plan discriminates in their favor. Wellmark conducts annual non-discrimination
testing as to eligibility, benefits, and contributions.
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