Pampa ISD Cafeteria Plan
The Pampa Independent School District provides all employees with the opportunity to participate in a IRS Section 125 Cafeteria Plan.
The Cafeteria Plan is an employee benefits program designed to take advantage of Section 125 of the Internal Revenue Code. The Cafeteria Plan allows employees to pay certain qualified expenses (such as health insurance premiums, dental, vision, cancer, accident) on a pre-tax basis, thereby reducing their total taxable income and increasing their spendable/take-home income. Funds set aside in Flexible Spending Accounts (FSAs) are not subject to federal, state, or Social Security taxes. On average, employees save from $.25 to $.49 for EVERY dollar they contribute to the FSA.
The Pampa ISD Plan Year is September 1 – August 31.
Flexible Spending Account (FSA)
A FSA allows employees to set aside funds on a pre-tax basis a pre-established amount of money per plan year. The employee can use the funds in the FSA to pay for eligible medical or dependent care.
Benefit to the Employee
An employee who participates in the FSA must place a certain dollar amount into the FSA each year. This "election" amount is automatically deducted from the employee's check (for that amount divided by the number of payroll periods). For example, an employee is paid 12 times a year, and elects to put $1,200 in the FSA. Thus, $100 is deducted pre-tax from each paycheck and is held in an account and to be reimbursed by filing a claim or using the TASC Debit Card.
For the 2014/2015 Plan Year, the individual contribution limit is $2,500.
In previous years, the Medical FSA had fallen under the “Use-It- Or-Lose-It” Rule. A new Carryover provision was implemented on October 31, 2013, which allows employees can carryover up to $500 of unused medical FSA funds from one plan year to the next with no fees o penalties. Reimbursements may be requested until the run out period of 90 days which is November 30 has passed.
The Carryover provision ensures the participating employee a safety net when determining how much money to set aside in a medical FSA each year. Employees can contribute funds with more confidence, knowing that they can rollover a maximum of $500 at the end of the plan year.
Dependent Child Care FSA
For the 2014/2015 Plan Year, the maximum contribution limit is $5,000 for family and $2,500 if married and filing taxes separately.
There is a grace period of 75 days or 2.5 months after the end of the official plan year during which employees may use up any funds remaining in their Dependent Care FSA. For example, the plan year ends August 31, the grace period for Dependent Car means that plan continues until up to November 15. If an employee incurs a Dependent Child Care expense after August 31 but before November 15, they can utilize the remaining funds from the previous plan year and submit requests for reimbursement. In addition to the 75 day grace period, plan participants have an additional 90-day run-out period in which they can submit requests for reimbursement for expenses incurred during the dates of service within the plan year and grace period.
The information in this E-mail message is confidential information intended only for the use of the individual(s) named above. If you, the reader of this message, are not the intended recipient, you are hereby notified that you should not further disseminate, distribute, or forward this E-mail message. If you have received this E-mail in error, please notify the sender.
Source: TACS Online – Section 125 Cafeteria Plan, 2014