FREQUENTLY ASKED QUESTIONS WHAT IS A CAFETERIA PLAN? It is a voluntary plan which provides you with a choice of receiving your full compensation in cash or to convert part of your compensation into tax-free benefits. IF I ELECT TO REDIRECT MY COMPENSATION, HOW CAN THIS BENEFIT ME? The biggest advantage is the tax savings. Since a Cafeteria Plan uses pre-tax dollars for reimbursement of personal expenses, you reduce your income taxes and social security tax by reducing your taxable salary.
IF I REDIRECT PART OF MY PAY, WON'T I MAKE LESS MONEY? No. Your net take home pay will increase by the amount of tax savings.
WHY SHOULD I PARTICIPATE IN THE MEDICAL REIMBURSEMENT PLAN IF I ALREADY HAVE MEDICAL INSURANCE? The Medical Reimbursement Plan offers reimbursement of medical care expenses NOT reimbursed by insurance. For example, expenses for eye exams, glasses, contacts, contact lens solution , dental expenses, co-pays , your annual deductible, coinsurance amounts and many Over-The-Counter medications . CAN I CHANGE OR REVOKE MY ELECTIONS DURING THE PLAN YEAR? In general, no. However, there is an exception for a change in family status. This includes (but is not necessarily limited to) marriage, divorce, death of a spouse or child, birth or adoption of a child, and termination or commencement of a spouse's employment.
WHAT DOCUMENTATION DO I NEED TO PROVIDE THE CAFETERIA PLAN ADMINISTRATOR FOR REIMBURSEMENT OF EXPENSES I INCUR? You will be required to complete a claim form, attach a copy of the medical or dependent care bill or a copy of the medical/dental insurance EOB (Explanation of Benefits) showing "proof of payment. WHAT IF I DON'T USE ALL OF THE MONEY I REDIRECT? The company will help you accurately determine your allowable expenses for the plan year so you can avoid having unused benefits at the end of the plan year. However, if you do have funds remaining in your account at the end of the year, that amount will be forfeited. This is subject to any carryover provisions implemented by the Plan.
WHAT OTHER NEGATIVES SHOULD I KNOW ABOUT? Because you are not paying for social security tax on that portion of your income that has been redirected, your social security benefits may be slightly reduced.