Cafeteria Plans

Aflac helps companies administer premium-only plans and Flexible Spending Accounts (FSAs) provided by WageWorks®, a preferred partner of Aflac.

Increase Value Without Increasing Cost

With Aflac cafeteria plans, you can reduce your employees’ taxable income, thereby reducing your share of FICA and FUTA taxes. This could mean a savings for you and your employees. The administration of flexible spending account plans doesn’t have to be complicated. WageWorks can work with you to implement and assist with administration of a Flexible Spending Account plan at minimal cost.

Helping Employees Save Money is Simple

1. Employees sign up for the Flexible Spending Account plan and estimate the amount of anticipated out-of-pocket medical or dependent care expenses for the year.
2. Then, they have the corresponding amount deducted in equal installments from each paycheck.
3. As employees incur medical or dependent care services, they submit paperwork (or use their takecare® Card, if eligible) and get reimbursed with their own tax-free dollars.

The Bottom Line

Not only do you enhance your employee benefit plan by making Aflac insurance policies available to your employees on a pre-tax basis, but you actually save money too. Extend your offering and savings with Unreimbursed Medical (URM) and Dependent Day Care (DDC) FSAs. 

takecare® Card

Convenience and ease of use are essential to attaining high usage rates with your flexible spending account plan. The takecare® Card is a fast and easy way for participating employees to access Unreimbursed Medical (URM) funds at the point of purchase. It looks and works like a credit card, eliminating the need for your employees to use out-of-pocket dollars to pay for eligible medical, dental and prescription expenses. Your company benefits by reducing the administrative costs associated with managing a paper process and your employees benefit by accessing their URM funds directly. There is no need to wait for claims to be processed and funds to be reimbursed.

For fees associated with WageWorks’ consumer-directed benefit accounts such as Cafeteria Plans, click here. To learn more about Flexible Spending Accounts offered through WageWorks, call 855.299.4385 or visit www.wageworks.com/employers/benefits.

Cafeteria Plan Amendments

Employers offering Cafeteria Plans can amend their plan documents to reflect recent changes enacted under the Patient Protection and Affordable Care Act. The documents below are sample amendments covering transition and health Flexible Spending Account (FSA) carryover rule changes.

Note: All sample cafeteria plan amendments provided by Aflac are for illustrative purposes only. Employers can use them as templates and adapt them to meet specific plan and factual needs. Employers should contact their legal, tax or benefit advisors for information and guidance on amendments. Aflac cannot give tax or legal advice.

Sample Cafeteria Plan Transition Rule Amendment

Under the transition rule, employers can amend Section 125 cafeteria plans to provide a one-time special enrollment (transition) to allow employees to change accident and health plan coverage elections in accordance with IRS regulations. This rule applies to the revocation, modification or commencement of salary reductions for accident and health plan coverage offered through cafeteria plans with the fiscal year beginning in 2013. This rule does not apply to any other qualified benefit offered through the cafeteria plan. See IRS Notice 2013-71 for more information.

• Transition rule amendment option A:  Includes transition rule language, along with a revised definition of “qualified benefit” under Section 125(f)3. It also reflects the new $2,550 limit on salary annual reductions for health FSAs.  
• Transition rule amendment option B:  Includes transition rule language, along with a revised definition of “qualified benefit” under Section 125(f)3. This amendment does not include health FSA language.

Sample Health FSA Carryover Rule Amendment

Employers can amend Section 125 cafeteria plans to provide a carryover of up to $500 of unused health FSA amounts into the next cafeteria plan year (immediately following the previous plan year only). The carryover can be used to pay or reimburse for health FSA medical expenses incurred during the entire plan year in which it is carried over. The carryover does not count against the annual $2,550 (indexed) salary reduction for the new year.

Plans that adopt the carryover provision are not permitted to provide a grace period with respect to health FSAs. For plan years beginning in 2013, the amendment can be adopted at any time on or before the last day of the plan year beginning in 2014. Plan participants must also be informed of the carryover provision. See IRS Notice 2013-71 for more information.

• Carryover rule amendment option A: Includes carryover language for use with plans that do not currently have a grace period.  
• Carryover rule amendment option B: Includes carryover language for use with plans that need to eliminate an existing grace period to provide for the $500 carryover provision.

This is general information about an evolving topic and does not constitute legal, tax or accounting advice regarding any specific situation. Aflac cannot anticipate all the facts that a particular employer or individual will have to consider in their benefits decision-making process. We strongly encourage readers to discuss their Health Care Reform situations with their advisors to determine the actions they need to take or to visit healthcare.gov (which may also be contacted at 800.318.2596) for additional information.