Michael Sullivan & Associates’ Cafeteria Plan is made available to all eligible full-time employees. Eligible expenses for reimbursement are included for dependents including Legal Spouse, Domestic Partners, Child(ren). New employees who are enrolling for the first time must complete all the necessary enrollment elections within 31 days of their initial eligibility date. If the employee fails to do so, they must wait until the company’s next open enrollment period to participate in the plans.
Insurance premiums for which you are responsible to pay will be deducted on a pre-tax basis from your paycheck. Paying these premiums on a pre-tax basis will increase your take-home pay as opposed to an after-tax deduction.
Health Care Reimbursement
The Health Care reimbursement portion of a Flexible Spending Account (FSA) allows an eligible employee to pay for certain health care expenses on a pre-tax basis. The annual limit for submitted expenses is $2,750 per employee. You may be reimbursed for eligible expenses incurred August 1, 2021 through July 31, 2022, provided they are submitted by October 30, 2022. It is important to remember to be conservative when participating in this portion of the plan. If you do not use your deferral funds prior to July 31, 2022 you will be able to roll over up to $500 in unused funds to be used in the next FSA plan year, but any unused funds greater than $500 will be forfeited under the IRS “use it or lose it” provision.
EXAMPLE: Jane sets aside $500 in 2021 through payroll deductions. If Jane only submits $400 in eligible expenses during 2021, she cannot receive the balance in cash, but the remaining $100 will be rolled forward into the 2022 Plan Year. However, if Jane sets aside $1,000 in 2021 through payroll deductions and only submits $400 in eligible expenses during 2021, she can only rollover up to $500 into the 2022 Plan Year and would forfeit the remaining $100 that had been unused.
This makes planning for Health Care Reimbursements very important. Included in this communication and available online is a list of eligible expenses. Please review these expenses and utilize the online tools to determine your annual expected eligible expenses.
Dependant Care Expenses
Qualified Dependent Care expenses can also be paid on a pre-tax basis. You may set aside up to $5,000 on a pre-tax basis to help pay for qualified dependent care expenses that enable you and your spouse (if married) or domestic partner to work or attend school full-time. You will find a list of qualifying dependent care expenses as you read on. Like the Health Care Reimbursement plan, expenses must be incurred before a request is submitted. The “Use It or Lose It” provision applies here as well but there is no provision to carry over unused funds to the next Plan Year. However, dependent care expenses are typically more predictable than health care expenses. This makes the planning process a little easier. Be sure to use the available online tools to estimate your annual expenses.