{"id":114,"date":"2017-08-01T16:40:19","date_gmt":"2017-08-01T16:40:19","guid":{"rendered":"http:\/\/wyomingtraining.com\/subject-matter-minute-blog\/?p=114"},"modified":"2022-08-11T20:23:51","modified_gmt":"2022-08-11T20:23:51","slug":"flexible-benefit-plan","status":"publish","type":"post","link":"http:\/\/wyomingtraining.com\/subject-matter-minute-blog\/flexible-benefit-plan\/","title":{"rendered":"Subject Matter Minute, Episode #6 – Flexible Benefit Plan"},"content":{"rendered":"

The below post is taken from the Video Blog, the Subject Matter Minute. If it’s a little hard to read, it’s because it’s taken from the spoken word. You can view the episode on YouTube if you would like. Find it here:\u00a0Episode #6 – Flexible Benefit Plan.<\/a>\u00a0(There is some extra info\u00a0in the show notes, so please click the above link to read them)<\/em><\/p>\n

If YouTube is blocked for you or your agency, you can scroll to the bottom of this post to view it from Google Drive.<\/em><\/strong><\/p>\n

You can also listen to an audio version: Episode #6: Flexible Benefit Plan<\/a>.<\/p>\n

Hello fellow state of Wyoming employees and welcome to another\u00a0episode of the subject matter minute. Thanks for joining me.<\/p>\n

I hope you have gotten some use out of the first 5 episodes\u00a0that I made, and….\u00a0I hope that you got to see the last one on Google Hangouts. I want to say thanks again\u00a0to Summer Wasson for giving me the information and helping me out on that.<\/p>\n

I gotta say that I know that\u00a0this subject matter minute thing is getting pretty serious\u00a0because I ironed for you today. \ud83d\ude42\u00a0Clothes that need ironed, are a lot\u00a0like dishes that can’t be washed in the dishwasher for me.\u00a0If you can’t wash a dish or an item in the dishwasher,\u00a0it’s dead to me… might as well throw it out,\u00a0it doesn’t get used. Clothes that need ironed\u00a0are kinda the same way. They stay in my closet, or I\u00a0get rid of them. Now typically this shirt doesn’t need ironed, I don’t know\u00a0why it was wrinkly, probably poor work on my part during laundry, but\u00a0I ironed for you guys and\u00a0I guess that means that you mean a lot to me!<\/p>\n

As I mentioned last time, I want to give you a little bit more about me\u00a0each time. This time I just want to talk about my family a little bit.\u00a0I’ve got 2 daughters, they are…\u00a0this coming year, going to both be in high school.\u00a014 and 16 year olds…. Freshman and a Junior.\u00a0And I’ve got to say that I’ve been pretty lucky so far,\u00a0they are good kids, um… way better\u00a0than I was in high school, so I’m counting my blessings\u00a0at this point. I know that can change on a dime but,\u00a0so far so good. Also, I’ve been married\u00a0to my wife for 23 years.\u00a0She is also a Lander-ite, I actually\u00a0dated her in high school, believe it or not…\u00a0We haven’t been together every since, but we dated in high school,\u00a0got back together. Been married for 23 years… it’s been a great run.<\/p>\n

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Matt’s beautiful family at the Jason Derulo concert at Frontier Days 2017!<\/figcaption><\/figure>\n

That’s it for the stuff\u00a0about me cause this episode is going to be a little bit\u00a0long I’m afraid, cause there is a lot of information.\u00a0But it’s very important information, and…\u00a0I think something that you all need to consider.\u00a0The subject today on the subject matter minute\u00a0is the State of Wyoming’s Flexible Benefit Plan.<\/p>\n

Alright, the Flexible Benefit Plan.\u00a0I guess it’s also known as the\u00a0cafeteria plan, flexible spending account,\u00a0or the 125 plan, just in case\u00a0you’ve heard of those. But, for all intents and purposes,\u00a0I think most people might know of it as the\u00a0blue sheet plan.\u00a0Because every year you’ve got to fill\u00a0out that blue sheet that is the flexible benefit\u00a0plan.<\/p>\n

First of all I want to thank this months subject matter expert,\u00a0or experts…. it’s the folks down at EGI.\u00a0Specifically Debra Vaughan and Pamela Unruh.\u00a0They got me the information, and hopefully I do it justice.\u00a0It’s a lot of great information.\u00a0Thanks Deb and thanks Pam, I appreciate it.<\/p>\n

Really there are 3 components to this, and that’s\u00a0all on that blue sheet that you see. First of all, it allows you to\u00a0elect to have your health insurance premiums\u00a0taken out of your pay, pre-tax.\u00a0That’s one of the things you’ve got to do on the blue sheet.<\/p>\n

The second component is a medical reimbursement account.\u00a0This is an account that allows you to take money out of\u00a0your pay, pre-tax, and you can use that money,\u00a0through out the year, on medical expenses.\u00a0Typically medical expenses that your insurance doesn’t cover.\u00a0You can put up to\u00a0$2500 a year into that\u00a0account, you don’t have to put $2500, \u00a0you can decide,\u00a0and it’s a monthly allotment.<\/p>\n

So, most people\u00a0will have that, if they choose to. There’s also one for\u00a0folks who have a high deductible health plan, and\u00a0a health savings account. Theirs is called\u00a0a wraparound medical reimbursement account.\u00a0It’s very similar, but the difference is\u00a0these folks can’t use\u00a0the money in that account for items\u00a0such as…..\u00a0the deductible expenses, or the drugs.\u00a0You can only use it for things that are truly not covered\u00a0by health insurance, which is things like vision, dental,\u00a0orthodontics. So those are the folks\u00a0with a high deductible insurance plan. That’s still a medical reimbursement account,\u00a0it’s just that they have a slightly different one.<\/p>\n

The 3rd component of the flexible benefit plan is\u00a0dependent daycare reimbursement.\u00a0You can get reimbursed up to $5000 in\u00a0a year,\u00a0for daycare expenses.\u00a0Same deal, you’ll sign up for it, they will take the money out\u00a0monthly,\u00a0up to $5000 that you can put towards\u00a0daycare.<\/p>\n

I’ve explained the components of it,\u00a0and at this point your wondering, ok, this is all my money…\u00a0and then you are putting it in an account…. what’s the point?\u00a0The point is that all of this money comes out of your check\u00a0pre-tax.\u00a0So, it reduces your taxable income.\u00a0So the less money you make in the government’s eye,\u00a0the less tax you pay.<\/p>\n

Let’s run a little scenario.\u00a0Let’s pretend I have 2 kids that are still in daycare.\u00a0They are in high school, but let’s say they are in daycare.\u00a0If you have 2 kids in daycare, it’s going to easily be $5000 for the year.\u00a0So, you do that maximum, and they\u00a0take out $5000 pre-tax.\u00a0Then you know that with a family of 4, like I have,\u00a0we typically have… with orthodontics,\u00a0vision and all these other tidbits…\u00a0we are easily going to have over $2500\u00a0in extra medical expenses.\u00a0So we max out our medical reimbursement account.\u00a0That’s $2500. Then I check the little\u00a0box that says “take out my\u00a0health insurance premiums pre-tax.”\u00a0I was going to check on this, but I forgot to,\u00a0and I don’t know what my monthly is, but\u00a0let’s just say it’s $300 per month.\u00a0For the family… that’s going to come out pre-tax.\u00a0So you have the $5000, you have the $2500,\u00a0and then you have $3600 in health insurance premiums.\u00a0We are talking almost $10,000\u00a0reduction in your taxable income.\u00a0Now that’s a big deal. And it could even be a\u00a0bigger deal … I’m not an accountant… but\u00a0if it was to put you down into a lower tax bracket,\u00a0it could be a very big deal. So you are saving on taxes.\u00a0That’s why you want to do this.<\/p>\n

There’s other reasons. One of them is that\u00a0with the medical reimbursement account,\u00a0you can use that money any time during the year.\u00a0You sign up for it.\u00a0Let’s say you decide on $1200 for the year.\u00a0$100 a month.\u00a0If you decide that you want to get lasik surgery in March,\u00a0you can go ahead and pull that whole amount, even\u00a0though you haven’t actually had it taken out of your checks yet,\u00a0and pay for your lasik surgery.\u00a0So you can do it at any point.<\/p>\n

Now it’s different with the childcare…\u00a0You actually have to have the money in your account\u00a0before you can use it. Federal rules on that, or the IRS.\u00a0With the childcare one, you have to have the money in the account\u00a0before you can actually\u00a0have it withdrawn and paid for.<\/p>\n

There’s a very important\u00a0piece of this that you need to know and keep in mind\u00a0when you are signing up and choosing the amounts you want to do.\u00a0This program, both the\u00a0medical reimbursement and the daycare reimbursement\u00a0are “use it or lose it.”\u00a0That means that if you decide to take out\u00a0$5000 for your\u00a0daycare, and one of them\u00a0ends up not being in daycare, and you only spend $3000, you’ll lose\u00a0$2000.<\/p>\n

I know that sounds mean and seems wrong, but on the flip\u00a0side, if for instance, you\u00a0sign up for $100 a month,\u00a0cause you are going to get lasik in\u00a0February. So you pull all that money that\u00a0you haven’t yet taken out of your checks. Pull all the money for lasik\u00a0surgery in February, and then you quit\u00a0your job in March, the State loses money. So there is risk both ways.<\/p>\n

So you sign up for all this…\u00a0you get all the appropriate paper work done… which, btw,\u00a0I will have another episode on how to submit all this stuff.\u00a0It’s just way too much information for this one.\u00a0You submit it all,\u00a0you go through the process, and\u00a0“boom,” you’ll get a check from EGI.<\/p>\n

Which brings up another thing.\u00a0You can do it in any fashion that you want.\u00a0If you have $2500\u00a0in the medical reimbursement account, you can\u00a0turn in your paperwork monthly and get monthly checks,\u00a0or, like I do, \u00a0you can wait until the end of the year,\u00a0and get a big check.\u00a0If it’s little things along the year that you are paying for\u00a0and you can go ahead and do that, it’s kinda like\u00a0a savings account for you in that\u00a0if you turn in everything at the end of the year,\u00a0you will get the total at the end.\u00a0It’s a chunk of money, it’s nice.<\/p>\n

That’s another benefit… you can kind of consider it one…\u00a0it’s automatic savings for something\u00a0that you are going to have to spend money on anyways.\u00a0I don’t know how you guys are, but\u00a0for me, it’s really hard… even if I know I’m going to have lasik\u00a0in October, I can say that I’m going to save for it, but\u00a0the odds are pretty good that I won’t. And then I’ll have to slap it on a credit card.\u00a0So this is a way of doing it.\u00a0They do it automatically, it’s there, you can use it at any point.<\/p>\n

On that… the timelines. If you are doing\u00a0a medical reimbursement for the year 2016,\u00a0you have until March 31st\u00a0of 2017 to\u00a0turn in the paperwork.\u00a0So, the following year, at the end of March,\u00a0is when you have to turn in all the paperwork.<\/p>\n

So, I talk fast…\u00a0seems like a lot of information.\u00a0I hope that you can tell that I think that this is a very good idea.\u00a0Reducing your taxable income, paying less in taxes,\u00a0and allowing them to put\u00a0aside the money for you. Doing it automatically.\u00a0Being able to\u00a0pay for things up front. Even when you don’t have the money\u00a0in the account yet. All these things…\u00a0Great benefit for the State of Wyoming.\u00a0Use it if this is something that you are going to spend\u00a0money on anyways.\u00a0Unless there is something your accountant says otherwise,\u00a0definitely get your\u00a0health insurance premiums taken out\u00a0pre-tax, and reduce your taxable income.<\/p>\n

That’s my financial advice, I am\u00a0not a financial advisor, but this\u00a0is what I think, my personal belief.<\/p>\n

Thanks for joining me and I’ll see you next time!<\/p>\n

Here is the full episode!<\/strong><\/p>\n