WHAT IS A FLEX PLAN ?

Sometimes referred to as a Cafeteria Plan, Flexible Savings Account (FSA), or a Section 125 plan, a Flex Plan lets you set aside a certain amount of your paycheck into an account - before paying income taxes.

Under the Internal Revenue Code Section 125, employees may make pre-tax contributions to a Flexible Spending Account. An employee may seek reimbursement from the Flexible Spending Account for expenses paid for childcare, deductibles and eligible medical expenses not otherwise covered under a health insurance plan. A Flex Plan allows an employee to increase his or her spendable income by allowing them to pay these expenses with pre-tax dollars.

There are two types of Flex Accounts:

• Health Flexible Spending Account, and
• Dependent Care Flexible Spending Account.

Flex Accounts are subject to the use-it-or-lose-it rule. Therefore, any money remaining in the Flex Account at the end of the Section 125 Plan year is forfeited.

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