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Allowable expenses under Section 125/ Flexible Benefit
Plans
The U.S. Government developed Section
125 as a way for people to help pay for expenses not normally covered under most
health insurance plans, and to help care for children and the elderly. Thus,
there are only certain things that the money can be used for. Among them are certain
expenses for child care, care for a family member who is unable to care for
him/herself, and healthcare expenses not covered by insurance such as glasses,
orthodontia, etc. The list below will help give a better idea of what is covered
under the Flexible Benefit Plan. It might surprise you!
Medical Expenses:
Orthodontic Services, Contact lenses,
Glasses, Dental, Health Insurance Deductibles and Co-Pays, Any tax deductible
services not covered by Health Insurance
Dependent Care
Expenses:
Daycare expenses for dependents under the age of 13 or other
dependents physically or mentally incapable of self-care. Up to $5,000 per year
(or $2,500 if married filing separately) per employee can be earmarked for DCR
expenses in a Cafeteria Plan. These items are just examples of the
types of things that a Section 125 plan can save you money on! For more
information refer to IRS Publication 502 for eligible medical expenses and IRS
Publication 503 for eligible dependent care expenses. Generally, these are
things you would be spending money on already. Now you can get that money
tax-free and save $$$!
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