Flex Advantage

What is a Flex Advantage Plan?

A Flex Advantage Plan allows a participant to set aside dollars each year from their paycheck to pay for qualified health and dependent care expenses. These dollars are deducted from wages before any income or social security taxes are paid. Participants will save between 25-40% on dollars set aside through the plan, and employers will save 7.65% of every dollar participants set aside per plan year. By using this tax savings plan, participants will notice an increase in take home pay and have access to a reimbursement account throughout the year to pay for qualified expenses.

Employers may also choose to sponsor a Flex Credit Plan, in which the employer provides an “allowance” of credits with which eligible employees can purchase desired benefits from predetermined options. In addition to the benefit options listed below, Flex Credit Plans can also include: group term life insurance, voluntary benefits (AFLAC), 401(k), cash-out, and vacation buying.

Flex Advantage Plans are available to “Employees” of a plan sponsor, as defined by Section 401(c) of the Internal Revenue Code.  Therefore, sole proprietors, general partners of a partnership, and more than 2% shareholders in a Sub-Chapter S Corporation are excluded from participating in a Flex Advantage Plan.  However, spouses, children, parents, etc. of an owner may be eligible if the business is a partnership or a sole proprietorship, and the spouse, child or parent is a bona fide employee, but not if the business is a Sub-Chapter S Corporation.  Flex Advantage Plans includes collective bargaining and leased employees unless they are specifically excluded by the employer.  A Flex Advantage Plan can be used to pay for expenses of an employee’s spouse and dependents as well.

Premium Only Plans are available to organizations who would like to solely provide pre-tax treatment of employer sponsored health, vision and dental premiums.

Benefit Options for Flex Advantage Plans

• Employer sponsored health, vision and dental premiums.
• Health flexible spending accounts (FSA) allow participants to set aside dollars for qualified out-of-pocket health care expenses, up to a maximum contribution amount set by the employer.
• Dependent Care Assistance Program (DCAP) allows participants to set aside dollars for children (under age 13) or adult day care so that the participant may work. The IRS sets the annual maximum contribution amount for the DCAP account. Maximum amount per calendar year is the lesser of: (1) $5000 for married filing joint or $2500 for married filing separate, (2) spouse’s total annual compensation or (3) half of your total annual compensation. If you are single, the maximum amount is $5000.
• Contributions to a Health Savings Account (HSA), which is a tax-exempt bank account that can be used to pay for eligible medical expenses. This option is only available for participants who are covered by a High Deductible Health Plan (HDHP). The employee, the employer, or both may make contributions to the Health Savings Account. Participants who are making contributions to an HSA are only eligible for a limited health FSA. This means that dollars set aside in the health FSA can only be used for eligible dental and vision expenses.

Reimbursement Options

• Employers have the option of offering Flex Debit Cards to participating employees. In most cases, the Flex Debit Card eliminates the need for out-of-pocket dollars by the participant at the point of purchase.
• Participants in both the Health FSA and DCAP benefit plans can choose to have their claims reimbursements made by either direct deposit or check.

Claims Processing

• Participants can send in a claim form along with supporting verification (receipt, Explanation of Benefits from insurance provider, bill from medical provider) of qualified Health FSA or DCAP expense purchases either by e-mail, fax, or mail.
• Advantage Administrators processes claims daily. If a claim is received by noon Monday-Friday, the reimbursement will be issued the next business day.

Plan Requirements

• The IRS requires that Cafeteria Plan participants only use elections for services or purchases made during the plan year and grace period (if offered). All unspent dollars at the end of the plan year will be forfeited back to the employer. This is referred to as the “Use it or lose it” rule.

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