Frequently Asked Questions about Cafeteria Plans

What is a cafeteria Plan?
A Cafeteria Plan is an opportunity for the employee to save a considerable amount of money in taxes.  By paying certain qualified expenses (non taxable benefits) out of your before-tax income, the amount of taxable salary is reduced.  Click here for more information.

What are 'non-taxable' benefits in a cafeteria plan?
1) Any out-of-pocket medical, dental, or optical expenses that you must pay (i.e. deductibles, co-pays, or expenses not paid by your insurance)

2) Dependent daycare expenses

3) Additional insurance coverage not paid by your employer ( i.e. disability, cancer, critical illness, etc.)

Can my child and spouse be covered under the cafeteria plan?
Yes, anyone who qualifies as your dependent on your tax return is covered under the Cafeteria Plan.  For example, all of you spouse's medical costs may be included.

What is the advantage of participating in the cafeteria plan?
You will save a significant amount of taxes not only federal and state income taxes, but also the 7.65% FICA (Social Security) tax savings.  For example, an individual in the 22% federal and state income tax bracket, who elects non-taxable benefits under the plan of  $2,000, would receive $593.00 of tax savings per year.  Click here to calculate what you can save!

How do I make this election?
At the beginning of a plan year, or after you have become an eligible employee, you will have the option to elect for paycheck deductions for medical or daycare expenses.  You will have to estimate you yearly expenses to calculate a pay period deduction.  After deductions begin, your contribution will be put into a trust account from which you will be reimbursed.

When is this election made?
The election is made prior to the beginning of the plan year.  For example, if your plan year begins January 1st, your election would be made in December.  This election is made on a paycheck reduction agreement.  An election may also be made after you have become an eligible employee (usually employed 90 days).

What if I become eligible to join the cafeteria plan after the plan year has started?
You may enroll in the Cafeteria Plan and begin having deductions taken from your paychecks, however, only expenses incurred after you have enrolled in the plan are eligible for reimbursement.  When you re-enroll at the beginning of the next plan year, all expenses for that year are eligible.

Can I change my election during the year?
Yes, but only under specific circumstances.  IRS regulations allow an employee to change their contributions only if there is a 'change in family status'.  A 'change in family status' is considered to be a marriage, birth or adoption, divorce, death of a spouse or child, or termination / significant change in employment of you or your spouse.

How are my contributions made to the cafeteria plan?
If you elect for medical, daycare or both reimbursements, your pay-period contribution will be deducted from your gross paycheck and put into a trust account held by FCF Benefits & Administration.  The frequency of contribution depends upon the amount of paychecks you receive annually.  If you are paid monthly, you will have 12 contributions, semi-monthly, 24 contributions, and so forth. 

What do I need to do to get money reimbursed to me?
Simply submit to FCF Benefits & Administration a reimbursement claim form with the supporting receipts, invoices, or other documents attached.  (These may be mailed or faxed to our office)  FCF will process the claim and forward to you a check or direct deposit paid from your trust account for the eligible expenses you have submitted.

Can I be reimbursed with direct deposit?
Yes, to set up direct deposit from your trust account, you must provide a voided check with your enrollment form.  Otherwise, you will be reimbursed by check.

How long will it take to be reimbursed?
After your claim has been received, it will be processed immediately.  Assuming there are sufficient funds to cover the claim, you will be reimbursed  through check or direct deposit.

Am I kept updated on how much is in my account?
Yes, you may check your account balance at anytime by accessing the website and navigating to 'account balances'.  (Your default PIN number is 1234)  In addition, you will receive an updated status of your account every time you receive a reimbursement check.

Are my dependent care and medical expense funds kept in one account?
All of your accounts are kept separately.  Meaning that daycare claims can only be paid out of your dependent care account and medical expense claims can only be paid out of your medical expense account. 

What happens if I submit a claim and my medical account balance is less than the amount of the claim?
You will be reimbursed up to the full amount of your annual Medical Cafeteria Plan Account election, even if the money has not yet been deposited into your account or deducted from your paycheck.  If your employer's funds have been exhausted by large claims, then more funds will be requested from the employer to cover claims. 

What happens if I submit a claim and my dependent care account balance is less than the amount of the claim?
Dependent care accounts work slightly different than medical spending accounts.  Your claim will paid up to the amount available in your account.  You will be reimbursed for the rest of the claim once the money is deposited in your account. 

Can I use this account to pay for my spouse's deductibles and co-payments?
Yes.  However, you cannot use this account to pay for your spouse's insurance premiums.

Are over-the-counter drugs eligible for reimbursement?
Yes.  IRS regulations allow for reimbursement of these items.  Click here for a list of eligible expenses.

Are day care expenses for before-school and after-school care eligible under the dependent care account?
Yes.  If a child under age 13 receives before-school and/or after-school care at school, you must separate the cost of the before and after-school care from the cost of the school.  If this cost is not available separately, it will be prorated on the number of hours your child spends in before and after-school programs.

Can I use the dependent care account to pay someone to take care of my elderly mother so I can work?
Yes.  If your mother lives with you and relies on you for at least 50 percent of her support, you can use the Dependent Care Account for her day care expenses.  However, the care must be day care so that you can work, not custodial nursing care.  Also, if you are married, the care must be necessary because your spouse also works or is a full-time student.

What happens if I don't use all the money in my account by the end of the plan year?
The IRS rules requires you to 'use it or lose it'.  It is imperative therefore, that you do not put more money into your account than you will use.  Helpful ideas are to pay for medical treatments that you've put off such as physicals, corrective eye surgery, dental visits, etc.  Purchase of glasses, contact lenses or other medical supplies at year end may also help to exhaust year end balances.

What happens if I have a claim at the end of the year and don't get it in by the last day of the plan year?
You will have time after the end of the year to submit claims for eligible expenses you incurred during the plan year.  Your employer will tell you the deadline for submitting claims ( usually 30 - 90 days past the end of the plan year).

What happens if I terminate my employment before the end of the year?
You may elect to continue to make contributions, either pre-tax by a lump sum amount of your remaining paycheck (s), to your Medical Expense Account, or on an after-tax basis(Monthly COBRA Contribution).You can still request the money in your account before the end of the plan year by turning in your reimbursement form (s).  If you decline to continue your Medical Expense contributions under COBRA, you are entitled to submit receipts only for the balance remaining in your account of actual deposits made.  The dates of service must be incurred before your date of termination. You may have access to these funds through the close of the plan year.

What is Cobra Coverage?
COBRA ( Consolidated Omnibus Budget Reconciliation Act of 1985 ) generally entitles workers (as well as covered spouses and dependents) to extend (at their own expense) their employer provided group health care coverage because they have been terminated or their hours have been reduced.

If you have any additional questions, please contact FCF Benefits & Administration at 801-939-4900 or email us at