Frequently Asked Questions
Q: What is a flexible benefit plan? A: A flexible benefit plan (commonly called flexible spending account) is regulated by Internal Revenue Code (IRC) Section 125; also known as a cafeteria plan. This allows you to reduce your salary and pay on a pre-tax basis for unreimbursed health care expenses (such as deductibles, co-payments, dental and vision expenses) and/or dependent care expenses (such as care of a child, elderly parent or disabled spouse). Q: What is the benefit of joining the flexible benefit plan? A: The true benefit is the tax savings you receive when participating in this benefit. Q: What taxes would I save if I participated in the flexible benefit plan? A: You would save on all of the following taxes:
Q: Can I change my election amount at any time during the plan year? A: No, you cannot change your elections during the plan year, unless you experience a qualifying event as defined under the IRC regulations. Q: What happens to the money I set aside? A: The funds are deposited into an account for out-of-pocket health care expenses. If you join the dependent care, a separate account will be set up for these expenses. The money you elected to have contributed into your health care account is available for immediate reimbursement up to your annual election amount. Dependent care account dollars are reimbursed as they accumulate in your account. You cannot transfer or "borrow" funds from one account to another. Q: How much money can I set aside into the flexible benefit plans? A: You can set up a maximum amount of $6,000 under the health care account. Under the dependent care account you set aside a maximum of $5,000 per plan year if you are a single parent or married and filing jointly; $2,500 if you are married and filing separately. The maximum for the dependent care account is set by the federal government and is set at $5,000. Q: What type of expenses can I get reimbursed from the health care account? A: You can pay for a wide variety of health care expenses through your health care flexible benefit plan. Some of these expenses include: deductibles, co-payments, co-insurance, dental and orthodontia expenses, prescription glasses and contact lenses. Please visit IRS Publication 502. Q: What type of expenses can I get reimbursed from the dependent care account? A: This program allows you to set aside pre-tax dollars to pay for dependent care services provided to your children, as well as an incapacitated parent or spouse. You are eligible if you are a single working parent, you have a working spouse, your spouse is a full-time student for at least five months during the plan year while you are working, or your spouse or dependent parent is disabled and unable to provide for his or her own care. Please visit IRS Publication 503. Q: How do I get reimbursed for my out-of-pocket expenses? A: You simply need to complete a reimbursement form along with copies of your receipts for services. The form and the copied receipts should be faxed to our group plan administrator. Q: How often are claims reimbursed? A: Our group plan administrator processes payments on a weekly basis to provide a quick turn-around time. If you have direct deposit set up through the College, your reimbursement will also be direct deposited unless you choose otherwise. Q: How do I know what my account balance is? A: You can view your balance online. In addition, our plan administrator, PBS, furnishes you with bi-annual statements to your home address. Q: What happens if there is money left in my account(s) at the end of the plan year? A: Under IRC 125, the money in your account will be forfeited and reverts to the general assets of Colorado College. This is known as the "use it or lose it" rule. For this reason, it is wise to make conservative estimates of your reimbursable expenses prior to each plan year. You may want to track what you spent in one plan year and use that as an estimate for the next plan year. If you visit either IRS Publication 502 or 503 you will see many creative ways to use the money left in your fund. Even if you forfeit some of your funds, the tax advantages will, in most cases, outweigh the loss. Q: What happens to the money in my account(s) if I leave my employment during the plan year? A: You can still process claims for services provided from the start of the plan year through to your termination date. Any other remaining funds in your health care reimbursement account will be forfeited if you choose not to participate in COBRA. Dependent care expenses must be incurred prior to the end of the plan year.
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Human Resources Office |
