A "Section 125 Cafeteria Plan", often referred to as a "Flexible Spending Account", helps you keep more of your paycheck by reducing your Federal and state taxes. It allows you to pay certain expenses before taxes are deducted from your paycheck. These expenses include daycare, co-insurance amounts and most out-of-pocket medical costs. The Plan provides two options under this benefit, Medical Care and Dependent Care accounts.
Medical Care Reimbursement Account, services incurred by you or an eligible family member that are not covered by the Plan for medical, dental and vision benefits may be reimbursable. For a detailed listing of eligible expenses, please refer to the Section 125 Flexible Spending Accounts document by clicking here or you can access this document in the Verus Health Document Library.
Dependent Care Reimbursement Account, you may be reimbursed for eligible expenses incurred by you for the care of your child, disabled spouse, elderly parent, or other dependent that is physically or mentally incapable of self-care, so that you (and your spouse) can work or actively look for work. For additional information, please refer to the Section 125 Flexible Spending Accounts document by clicking here or you can access this document in the Verus Health Document Library.
Currently, the maximum biweekly deduction for participation in the Medical Flexible Spending Account is $96.15 biweekly ($2,500 annually). The maximum biweekly deduction for participation in the Dependent Flexible Spending Account is $192.30 biweekly ($5,000 annually).
As employers continue to shift more healthcare costs to employees, innovative consumer-driven options are making the headlines. One of these options is a debit card that can be used with a Flexible Spending Account (FSA). Unfortunately, FSAs are often an overlooked and underutilized employee benefit. Many employees do not understand the tax-saving benefits and are typically discouraged from participating because they must pay out of pocket twice prior to receiving reimbursement. However, the FSA debit card, simplifies the reimbursement process.
By using the debit card to pay for qualified healthcare expenses, dependent care, transit and parking with pre-tax dollars, an employee lowers their overall tax burden while improving cash flows because there are no out-of-pocket expenses at the time of service.
For those employees participating in the Flexible Spending Accounts; i.e. medical care and dependent care, you now have access to the MBI Benefits Card. The new debit card works like a charge card; it allows you to pay for items such as copays, prescriptions drugs, etc. at the point of service. Use of the card deducts these amounts directly from your FSA account and eliminates the endless paperwork and reimbursement wait time. You are, however, required to keep your receipts as documentation in the event of an IRS audit. Please refer to the MBI Debit Card brochure here.
For more information about Flexible Spending Accounts, please refer to the Section 125 Summary Plan Description and Plan Document located here and also on the Verus Health website in the document library.