Section 125 Plan Example by kpw16392


									             Section 125 Plan Example
                                     Single Parent
                                Section 125
                                                 Section 125
                                                                    Working Couple
                                                                  Section 125
                                                                                    Section 125
                                                                                                            Family Person
                                                                                                       Section 125
                                                                                                                          Section 125
                                                                                                                                                  IBIS 125 Plan
 Total Monthly Pay                      $1,600         $1,600           $2,416            $2,416               $3,333              $3,333

 Less Non-Taxable Benefits
   Insurance Premiums                        0           $110                0              $110                    0                $110
   Medical Dental Expenses                   0            $60                0               $60                    0                 $60
   Child Care Expenses                       0           $200                0              $200                    --                  --
 Total Pay Subject to Tax               $1,600         $1,230           $2,416            $2,046               $3,333              $3,163

 Less Deductions
   Federal & State Taxes                  $230           $123             $351              $271                 $581                $543
   Social Security                        $122            $94             $185              $157                 $255                $242
 After Tax Income                       $1,248         $1,013           $1,880            $1,618               $2,497              $2,378

 After Tax Expenses
   Insurance Premiums                    $110                0              $110                0                 $110                    0
   Medical Dental Expenses                $60                0               $60                0                  $60                    0
   Child Care Expenses                   $200                0              $200                0                    --                   --

 Spendable Income                        $878          $1,013           $1,510            $1,618               $2,327             $2,378
                                                        - $878                           -$1,510                                 -$2,327

 Annual Increases in                             $135 x 12 mo.=                    $108 x 12 mo.=                         $51 x 12 mo.=
 Take Home Pay                                     $1,620                            $1,296                                  $612

REIMBURSEMENT WORKSHEET                                                                             INSURANCE AND SERVICES, INC.
Please use this worksheet to help estimate your family’s medical expenses
on an annual basis. This list contains only the more common expenses.                            Administrator:
                                                                                         105/125 MORTGAGE CORPORATION
You should estimate the expenses for you, your qualified dependents, and                       Jolene Mennenga

your spouse, that will not be reimbursed by any insurance.                      105/125 Administrative Coordinator:
                                                                                                    Eric Pickering

QUALIFYING EXPENSE                       ANNUAL AMOUNT                                 105/125 Claims Processor:
                                                                                                      Amy Angell
Deductible                               $__________________
Max out of pocket expense (co-insurance) $__________________                          Marketing Representatives:
                                                                                                    Jolene Mennenga
Dental                                   $__________________
                                                                                                       Don Easter
Eye Exams
                                                                                                     James Johnston
                                                                                                                                               Health         Dental          Vision
                                                                                   Customer Service Representatives:
Glasses/contacts                         $__________________                                    Jean Burlingame
Prescription Co-pays                     $__________________                                     Martha Fering
                                                                                                 Kathy Manning
Hearing devices                          $__________________
Chiropractic Care                        $__________________                                           Billing:
                                                                                                  Sylvia Richards
Physical Therapy                         $__________________                                        Nikki Davis
Drug and alcohol treatment               $__________________
Laser Eye Surgery                        $__________________
                                                                                                8800 NW 62nd Ave
Transportation/medical mileage           $__________________                                      PO Box 6210
Over the counter items                   $__________________                                   Johnston, IA 50131
Crutches, braces, orthopedic devices     $__________________

                                                                                                                                                        OTC      Dependent Care
TOTAL                                     $__________________                               Claims Fax: 515.286.4244
                                                                                                                                                    The IBIS Advantage
                         Understanding Your Flexible Benefits Plan
Advantages of            What is a 125 “Flexible Benefits”                                             you to pay for group health premiums, other qualified insurance               held in the appropriate benefit account for your use. When you
   the IBIS              Plan?                                                                         premiums, un-reimbursed medical costs, child and dependent                    incur an expense, you must submit a claim for reimbursement
  125 Plan:              Your bank is offering a plan to provide you with the finest benefits care costs and more . . . all with tax free dollars. You will have                     (forms and instructions are in the enrollment packet or on our
           *             package available… and allows you to pay with tax free dollars.      more take-home pay. The rules you must follow are spelled out                          website at Claims are processed
ONE STOP SHOP                                                                                          in the IRS Code Section125. You will elect to have a specified                weekly and will be paid through direct deposit to the account of
                         Under section 125 of the Internal Revenue Code, this plan allows
 for all your benefit
                                                                                                       dollar amount withheld from each pay check. These funds will be               your choosing.
• group health plan
 • Section 105 plan      Frequently Asked Questions                                 Q. When can I make changes to my                         Q. Who receives the reimbursement and                        do not contribute to Social Security on the elected
                                                                                    plan?                                                    how do they get it?                                          contributions, the employee may see a slight reduction
 • Section 125 plan                                                                 A. With the exception of a Change in Family Status,      A. The employee receives the reimbursement through           in Social Security.
                         Q. What is a flexible spending account?
                         A. A flexible spending account allows you to use           you will only be allowed to change your elections        a direct deposit that is initiated through a request for a
                         pre-tax dollars to pay for certain expenses that are not   once a year, at the open enrollment before the new       reimbursement.                                               Q. If I terminate or lose my job what
 Simplified claims                                                                  plan year begins.                                                                                                     happens to my money?
                         covered by any other insurance plan. The elections for
     submission:                                                                                                                             Q. How do I submit claims?                                   A. You must incur the expenses before the date you
                         these benefits must be made prior to the new plan year
      EOB’s and          and cannot be changed unless you have a qualifying         Q. How much can I set aside in these                     A. Claims coming from your Iowa Bankers Benefit              terminate in the plan. You have a specified time frame
     prescriptions       event. You must use proper documentation when              accounts?                                                Plan do not need to be submitted. If you are covered         to request those claim reimbursements. Usually 90
                         submitting claims, it must be incurred within the plan     A. Your employer will set the maximum and                under this plan, all claims information will be sent         days or until plan year end. Any claims incurred after
will be electronically
                         year limits and it must be for a qualifying expense.       minimum you can set aside in your un-reimbursed          electronically to your cafeteria account from the            your termination date will be denied and unused
      transferred                                                                   medical accounts. Remember to be conservative in         health plan. For any other claims not covered (such          money must be forfeited.
 to your 125 plan                                                                   your planning. All unused funds will be forfeited        as chiropractic, dental, vision, OTC items, etc.) you
                         Q. Why are flexible benefit plans
           *             allowed?                                                   at the end of each plan year. This is referred to as     must submit the proper receipt along with a completed        Q. Can I use the money in my medical
    Low monthly          A. In 1978 the IRS under code Section125, allowed          the “Use it or lose it rule”. Different rules apply      claim form by fax to 515-286-4244 ATTENTION:                 flex spending account for dependent
                         employees to elect to have pre-tax dollars withheld        for dependent care, as the government has set the        125 Claims Department OR by mail to Iowa Bankers             care expenses or vise versa?
 administrative fee
                         from their payroll to pay for out-of-pocket expense,       maximum limit on the dependent care elections.           Insurance and Services, Inc, PO Box 6210, Johnston,          A. No, you must specify how much you want in each
   per participant                                                                  Those are currently set at $2500 married filing          IA 50131-6210.                                               account. Monies are not co-mingled.
                         dependent care expenses and certain insurance
           *                                                                        separate and $5000 if single or married and filing
                         premiums. Studies show that when employees become
   Toll free access                                                                 jointly.                                                 Q. How often are claims paid?                                Q. Are Over The Counter (OTC)
                         more aware of how they spend money on benefits,
         to a                                                                                                                                A. We will pay claims weekly on Friday. Make sure            items and medications eligible for
                         they make wiser choices on health care items. By
  customer service                                                                  Q. Why can’t I get my money back?                        your claim form is signed, has the proper receipts           reimbursement?
    representative       use of the pre-tax dollar incentives, the government
                         wants to help both employees and employers control         A. Because of the tremendous tax advantage offered       attached, and is in our office by Wednesday at 10:00         A. Yes. The IRS has released Revenue Ruling 2003-12,
           *                                                                        by this plan, the IRS wishes to maintain some type of    a.m.                                                         which allows the costs of certain over the counter
                         escalating health care costs.
 Weekly processing                                                                  control over the amounts going into these accounts.                                                                   (OTC) items and medications used to treat medical
           *             Q. Can I make changes to my election                       The risk of forfeiting money at year end limits          Q. Do I have to be in the employer’s                         conditions to be eligible for reimbursement under your
   Direct deposit        mid-year?                                                  participation and thereby gives the IRS some control.    medical plan to participate in the                           medical flex spending account (see flyer in enrollment
                         A. No, unless you have a qualifying event. (Birth,                                                                  program?                                                     packet.) Some items may require an attending
                         adoption, death, marriage, divorce, change in              Q. Where does this forfeited money go?                   A. No, this program is a separate benefit and does not       physician’s certification. Cosmetic procedures are
 On-line access to                                                                  A. By law, it can not be refunded to the employees. It   affect your current medical program.                         not allowable. The OTC item needs to have the date
                         employment status, etc.) Your employer will have a
 account balances                                                                   reverts back to your employer who can use it towards                                                                  and the name of the item clearly printed on the cash
                         form that needs to be completed on a timely basis if
                         one of these occurs.                                       the administration costs of the plan.                    Q. What effect does this have on my                          register receipt.
                                                                                                                                             Social Security?
                                                                                                                                             A. Because both the employer and the employee

                                                                                                                                                                                                          The IBIS Advantage

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