This plan enables benefits-eligible employees to lower state, federal and social security taxes by paying for certain kinds of expenses with money deducted from their pay on a pretax basis. The program is comprised of three separate features:
Any employee who contributes to the cost of a Colleges' sponsored medical plan and/or the voluntary dental insurance plan will have their contribution(s) deducted from their pay on a pretax basis, tax law permitting. These deductions will be automatic and begin upon enrollment or the date an employee's contribution is required. Employees who wish to contribute on an after-tax basis must contact Human Resources at ext. 3312 to complete the necessary paperwork.
Up to an annual maximum of $6,000 can be contributed on a pretax basis to this account. Money contributed to this account can be used to reimburse eligible health care expenses not covered by other insurance policies provided by the Colleges. Expenses like optical care, dental care, routine physicals, plan deductible and co-payments are examples of items that may be reimbursed. Expenses which are not covered by a spouse's policy are also eligible to be covered by the account.
Up to an annual maximum of $5,000 can be contributed on a pretax basis to this account to reimburse eligible dependent care expenses. Expenses for children (up to age 13) or for older, disabled dependents can be covered under this plan provided the dependent is claimed as a dependent for tax purposes and the expense is necessary for the employee or spouse to work.
This plan is set up in accordance with IRC section 125, therefore any monies set aside for medical/dental/vision or for dependent care expenses, and remains unspent as of the end of the year, are forfeited. Great care must be taken in budgeting the amount for these accounts.