Hello fellow state of Wyoming employees and welcome to another
episode of the subject matter minute. Thanks for joining me.
I hope you have gotten some use out of the first 5 episodes
that I made, and....
I hope that you got to see the last one on Google Hangouts.
...and on that, I want to say thanks again
to Summer Wasson for giving me the information and helping me out on that.
I gotta say that I know that
this subject matter minute thing is getting pretty serious
because I ironed for you today. :)
Clothes that need ironed, are alot
like dishes that can't be washed in the dishwasher for me.
If you can't wash a dish or an item in the dishwasher,
it's dead to me... might as well throw it out,
it doesn't get used. Clothes that need ironed
are kinda the same way. They stay in my closet, or I
get rid of them. Now typically this shirt doesn't need ironed, I don't know
why it was wrinkly, probably poor work on my part during laundry, but
I ironed for you guys and
I guess that means that you mean a lot to me!
As I mentioned last time, I want to give you a little bit more about me
each time. This time I just want to talk about my family a little bit
I've got 2 daughters, they are...
this coming year, going to both be in high school.
14 and 16 year olds.... Freshman and a Junior.
And I've got to say that I've been pretty lucky so far,
they are good kids, um... way better
than I was in high school, so I'm counting my blessings
at this point. I know that can change on a dime but,
so far so good. Also, I've been married
to my wife for 23 years
She is also a Lander-ite, I actually
dated her in high school, believe it or not...
We haven't been together every since, but we dated in high school,
got back together,
Been married for 23 years... it's been a great run.
That's it for the stuff
about me cause this episode is going to be a little bit
long I'm afraid, cause there is a lot of information
But it's very important information, and...
I think something that you all need to consider...
The subject today on the subject matter minute
is the State of Wyoming's Flexible Benefit Plan.
Alright, the Flexible Benefit Plan.
I guess it's also known as the
cafeteria plan, flexible spending account,
or the 125 plan, just in case
you've heard of those. But, for all intents and purposes,
I think most people might know of it as the
blue sheet plan.
Because every year you've got to fill
out that blue sheet that is the flexible benefit
plan.
First of all I want to thank this months subject matter expert,
or experts.... it's the folks down at EGI.
Specifically Debra Vaughan and Pamela Unruh.
They got me the information, and hopefully I do it justice.
It's a lot of great information.
Thanks Deb and thanks Pam, I appreciate it.
Really there are 3 components to this, and that's
all on that blue sheet that you see. First of all it allows you to
elect to have your health insurance premiums
taken out of your pay, pre-tax.
That's one of the things you've got to do on the blue sheet.
The second component is a medical reimbursement account.
This is an account that allows you to take money out of
your pay, pre-tax, and you can use that money,
through out the year, on medical expenses.
Typically medical expenses that your insurance doesn't cover.
You can put up to
$2500 a year into that
account, you don't have to put $2500, you can decide,
and it's a monthly allotment. So, most people
will have that, if they choose to. There's also one for
folks who have a high deductible health plan, and
a health savings account. Theirs is called
a wraparound medical reimbursement account.
It's very similar, but the difference is
these folks can't use
the money in that account for items
such as.....
the deductible expenses, or the drugs.
You can only use it for things that are truly not covered
by health insurance, which is things like vision, dental,
orthodontics. So those are the folks
with a high deductible insurance plan.
That's still a medical reimbursement account,
it's just that they have a slightly different one.
The 3rd component of the flexible benefit plan is
dependent daycare reimbursement.
You can get reimbursed up to $5000 in
a year,
for daycare expenses.
Same deal, you'll sign up for it, they will take the money out
monthly,
up to $5000 that you can put towards
daycare.
I've explained the components of it,
and at this point your wondering, ok, this is all my money...
and then you are putting it in an account.... what's the point?
The point is that all of this money comes out of your check
pre-tax.
So, it reduces your taxable income.
So the less money you make in the government's eye,
the less tax you pay. Let's run a little scenario.
Let's pretend I have 2 kids that are still in daycare.
They are in high school, but let's say they are in daycare.
If you have 2 kids in daycare, it's going to easily be $5000 for the year.
So, you do that maximum, and they
take out $5000 pre-tax.
Then you know that with a family of 4, like I have,
we typically have... with orthodontics,
vision and all these other tidbits...
we are easily going to have over $2500
in extra medical expenses.
So we max out our medical reimbursement account.
That's $2500. Then I check the little
box that says "take out my
health insurance premiums pre-tax."
I was going to check on this, but I forgot to
and I don't know what my monthly is, but
let's just say it's $300 per month.
For the family... that's going to come out pre-tax.
So you have the $5000, you have the $2500,
and then you have $3600
in health insurance premiums.
We are talking almost $10,000
reduction in your taxable income.
Now that's a big deal. And it could even be a
bigger deal ... I'm not an accountant... but
if it was to put you down into a lower tax bracket,
it could be a very big deal. So you are saving on taxes.
That's why you want to do this.
There's other reasons. One of them is that
with the medical reimbursement account,
you can use that money any time during the year.
You sign up for it.
Let's say you decide on $1200 for the year.
$100 a month.
If you decide that you want to get lasik surgery in March,
you can go ahead and pull that whole amount, even
though you haven't actually had it taken out of your checks yet,
and pay for your lasik surgery.
So you can do it at any point. Now it's different with the childcare...
You actually have to have the money in your account
before you can use it. Federal rules on that, or the IRS.
With the childcare one, you have to have the money in the account
before you can actually
have it withdrawn and paid for. There's a very important
piece of this that you need to know and keep in mind
when you are signing up and choosing the amounts you want to do.
This program, both the
medical reimbursement and the daycare reimbursement
are "use it or lose it."
That means that if you decide to take out
$5000 for your
daycare, and one of them
ends up not being in daycare, and you only spend $3000, you'll lose
$2000.
I know that sounds mean and seems wrong, but on the flip
side, if for instance, you
sign up for $100 a month,
cause you are going to get lasik in
February. So you pull all that money that
you haven't yet taken out of your checks. Pull all the money for lasik
surgery in February, and then you quit
your job in March, the State loses money.
So there is risk both ways.
So you sign up for all this...
you get all the appropriate paper work done... which, btw,
I will have another episode on how to submit all this stuff.
It's just way too much information for this one.
You submit it all,
you go through the process,
"boom," you'll get a check from EGI.
Which brings up another thing.
You can do it in any fashion that you want.
If you have $2500
in the medical reimbursement account, you can
turn in your paperwork monthly and get monthly checks,
or, like I do, you can wait until the end of the year,
and get a big check.
If it's little things along the year that you are paying for
and you can go ahead and do that, it's kinda like
a savings account for you in that
if you turn in everything at the end of the year,
you will get the total at the end.
It's a chunk of money, it's nice.
That's another benefit... you can kind of consider it one...
it's automatic savings for something
that you are going to have to spend money on anyways.
I don't know how you guys are, but
for me, it's really hard... even if I know I'm going to have lasik
in October, I can say that I'm going to save for it, but
the odds are pretty good that I won't. And then I'll have to slap it on a credit card.
So this is a way of doing it.
They do it automatically, it's there, you can use it at any point.
On that... the timelines...
If you are doing
a medical reimbursement for the year 2016,
you have until March 31st
of 2017 to
turn in the paperwork.
So, the following year, at the end of March,
is when you have to turn in all the paperwork.
So, I talk fast...
seems like a lot of information...
I hope that you can tell that I think that this is a very good idea.
Reducing your taxable income, paying less in taxes,
and allowing them to put
aside the money for you. Doing it automatically.
Being able to
pay for things up front. Even when you don't have the money
in the account yet. All these things...
Great benefit for the State of Wyoming.
Use it if this is something that you are going to spend
money on anyways.
Unless there is something your accountant says otherwise,
definitely get your
health insurance premiums taken out
pre-tax, reduce your taxable income.
That's my financial advice, I am
not a financial advisor, but this
is what I think, my personal belief.
Thanks for joining me and I'll see you next time!
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