Flexible Spending Accounts (Section 125) Shirley NY
In the United States, employees can have flexible spending accounts set up through their employers. Under Section 125, as an employee, you can take advantage of a cafeteria plan to have a portion of your earnings set aside to help pay for expenses.
4110 Veterans Memorial Hwy
61 Route 25A
East Setauket, NY
251 E Main Street
Bank of America - Selden
994 Middle Country Rd
1393 Veterans Memorial Highway
5191 - 6 Sunrise Hwy
2100 Middle Country Rd
82 East Main St
Bank of America - Hauppauge
190 Vanderbilt Motor Parkway
1377 Motor Parkway
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Under Section 125 of the Internal Revenue Service, employers can set up and administer a cafeteria plan for their employees. The employees have the opportunity to receive certain benefits and not have to pay taxes on the money they have deducted for their flexible spending account. In order to sign up for this program, you do have to choose at least one taxable benefit and one qualified benefit. The IRS has a cap of $5000 placed on the amount you can contribute to the account.
The qualified benefits for flexible spending accounts include such things as assistance with adoption, medical expenses, assistance for care for dependents, insurance coverage for group life, and health savings accounts. There must be a written plan in place for the account to take effect. Employers are only allowed to offer employees an opportunity to choose between taxable and non-taxable benefits through a Section 125 plan. As a participant in a plan under Section 125, you can choose benefits that are more important to you and elect not to have others included in the plan. In this way a flexible spending account can be tailored to meet the needs of individuals. This plan also gives you a $50,000 life insurance policy.
Most employees choose a medical flexible spending account. This is because it provides insurance for medical services that are not usually covered under usual health plans. Under such a plan, you can have dental and vision coverage, as well as coverage for the cost of prescription medications. However, the plan does not cover the cost of a health insurance plan nor do the benefits include the cost of cosmetic surgeries or items. The health care expenses covered under Section 125 administration must be used to treat a medical condition, whether it is serious or not. Some over-the counter medications qualify under the medical plan, such as antacids, allergy medication, pain relievers and cold medicine.
Since the money deducted from earnings is tax-free, you can take advantage of Section 125 administration to help pay for claims that would otherwise have come out of your earnings after taxes. This helps give you more peace of mind knowing that you do have the monies available in your flexible spending accounts should a medical emergency arise.
Paying for the care of dependents is often a problem that many workers have to deal with. With a Dependent Care flexible spending account, Section 125 allows for the establishment of a benefit that will help pay for some of these expenses. It usually refers to childcare, but can also be used for caring for adults, such as aged parents. These expenses do not apply to summer camps for children or for the cost of seniors in a long term care facility. The dependent expenses cover the cost of daily care where you go home after work and can take over the care for a period of time. One of the requirements of this plan is that the dependents live with you in your home. You also have to enroll in the program within thirty-one days, of the first month, of beginning employment.
The way a dependent care flexible spending account works is that you have money deducted from your earnings every pay period and then deposited into the account. You continue to pay the expenses related to caring for your children or adults you look after as usual. At the end of a period of time, such as six months or a year, or for individual expenses, you submit a claim for the expenses and receive reimbursement. However, you can only be reimbursed up to the amount of money you have in your account. In the case of married couples with both spouses contributing to a plan, the total amount contributed to the plan cannot exceed $5000 in a calendar year. Even if only one spouse is employed, the monies from the dependent care account can be used to help the other partner to look for work or attend school.