Section 125 Plan
Flexible Benefit
Please click into the section you’d like to view:
1. Flexible Benefit Plan Overview
2. Pre-Tax Group Insurance Premiums
3. Dependent Care Reimbursement Account
4. Medical Reimbursement Account
5. How to File a Claim
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Section 125 Plan
Flexible Benefit Plan
Overview
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What is a Flexible Benefit Plan?
The intent of this slide presentation is to provide a brief overview of
the Flexible Benefit Plan (Flex Plan).
Please see your employer’s Plan Document for details of the Flex
Plan rules and regulations before participating in the program.
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What is a Flexible Benefit Plan?
What is a Flexible Benefit Plan?
Welcome to an overview of the Section 125 Flexible Benefit Plan
(Flex Plan)!
Flex Plans are an excellent way to increase your spendable income
and reduce your federal and FICA taxes (and in most states, your
state income taxes).
Diversified Benefit Services, Inc. (DBS) is the third party
administrator of your employer’s Flex Plan. DBS is located in
Hartland, Wisconsin and has administered these plans since 1987.
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What is a Flexible Benefit Plan?
What is a Flexible Benefit Plan?
It’s a tax reduction plan for employees!
Legislation creating these plans was enacted by
Congress in 1978.
The regulations are recorded in Section 125 of
the IRS Code.
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What is a Flexible Benefit Plan?
What is a Flexible Benefit Plan?
Under Section 125 of the IRS Code, you as an
employee, can pay for qualified expenses
using money from your paycheck that is deducted
pre-tax.
By using pre-tax dollars, you reduce the amount you
pay in taxes!
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What is a Flexible Benefit Plan?
What can a Flex Plan do for you?
By eliminating Federal and FICA tax (and
possibly state tax) on qualifying expenses,
the plan saves the average participant
approximately 15%-30% in taxes on those
expenses.
It can increase the amount of your
paycheck that you get to keep!
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What is a Flexible Benefit Plan?
The Benefit Categories
There are three main categories of expenses
that qualify for pretax reimbursement.
Group Insurance Premiums
Dependent Care Reimbursement Account
Medical Reimbursement Account
The details of these categories are described
in the other presentations on this website.
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What is a Flexible Benefit Plan?
What does “pre-tax” mean?
You earn what is called
“gross pay”. This refers to the
amount your employer pays
you.
However, this is not what most
people get to spend from their
paycheck. Why?
Because the government takes
a percentage of your “gross
pay” first (in the form of taxes).
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What is a Flexible Benefit Plan?
What does “pre-tax” mean?
With the Flex Plan, the government
allows you to set aside a portion of your
“gross pay” to cover certain expenses
before a percentage of it is deducted in
taxes.
The remainder of your paycheck is what
the government declares subject to
taxes.
By deducting pre-tax monies, you pay
less in taxes!
The chart on the next slide illustrates
this concept.
What is a Flexible Benefit Plan?
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Paycheck Comparison
I.
Insurance Premiums
II.
Dependent Care
III.
Medical, Dental, Vision expense
*(Total of I, II, III = $268)
What is a Flexible Benefit Plan?
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Does the Flex Plan affect my Social Security
retirement benefits?
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The Flex Plan may affect your Social Security retirement benefit as
you are lowering the amount of your income from which you
contribute Social Security taxes.
For most people, the effect is minimal.
Visit the Social Security Administration website at www.ssa.gov if
you have questions on how to calculate retirement benefits.
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What is a Flexible Benefit Plan?
Expenses must be incurred in the Plan Year
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The Plan Year is the time frame your employer’s plan is
administered.
It is important that any expenses you submit for reimbursement are
incurred within the Plan Year.
This means the dates of service (when the service was rendered)
must fall within the Plan Year.
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What is a Flexible Benefit Plan?
In Summary:
 Flex Plans are a great way to increase your take home pay.
 Please review the other presentations to learn more about the plan.
 Ask your employer how you can enroll in the plan and start reducing
your taxes!
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What is a Flexible Benefit Plan?
Additional questions?
www.dbsbenefits.com
Diversified Benefit Services, Inc. Customer Service Representatives
are available Monday – Friday 8:30 a.m. – 5:00 p.m. (CST)
1- (800)-234-1229
1- (262)-367-3300
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What is a Flexible Benefit Plan?
Section 125 Plan
Pre-tax Premium Overview
For Employer Sponsored Group Insurance Premiums
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Pre-Tax Premium
What is a Flexible Benefit Plan?
The intent of this slide presentation is to provide a brief overview of the
Pre-tax Premium area of the Section 125 Flexible Benefit Plan (Flex Plan).
Please see your employer’s Plan Document for details of the Flex Plan
rules and regulations before participating in the program.
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Pre-Tax Premium
I. Group Insurance Premiums
U Under the Section 125 Plan, group insurance
n
d
e
r
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premiums you pay from your paycheck through your
employer for health (or other qualified group insurance
premiums) may be deducted from your paycheck with
pre-tax dollars.
This will be done automatically by your employer through regular
payroll deductions.
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Pre-Tax Premium
I. Group Insurance Premiums
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Your insurance contributions are sent by your employer to
the insurance company on your behalf.
By paying for your group insurance premiums pre-tax, you
save approximately 15%-30% in taxes.
The chart on the next slide illustrates this concept.
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Pre-Tax Premium
Pre-tax Illustration
Pre-tax
After-tax
Gross Pay:
$1,000
$1,000
Pre-tax Group Insurance:
-
100
-
Taxable Income:
$
900
$1,000
Taxes (assume 25%)
-
225
- 250
$
675
$
750
0
-
100
$
650
After-tax Group Insurance:
Take Home Pay:
$
675
Increased Take Home Pay:
$
25
0
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Pre-Tax Premium
I. Group Insurance Premiums
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With this area of the Section 125 Plan, there is nothing
you need to do.
There are no forms to complete.
The monies will not show up on your W-2 form as taxable
income.
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Pre-Tax Premium
Additional questions?
www.dbsbenefits.com
Diversified Benefit Services, Inc. Customer Representatives
are available Monday – Friday 8:30 a.m. – 5:00 p.m. (CST)
1- (800)-234-1229
1- (262)-367-3300
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Pre-Tax Premium
Section 125 Plan
Dependent Care
Reimbursement Account
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Dependent Care
What is a Dependent Care Reimbursement Account?
The intent of this slide presentation is to provide a brief overview of
the Dependent Care Reimbursement Account area of the Section
125 Flexible Benefit Plan (Flex Plan).
Please see your employer’s Plan Document for details of the Flex
Plan rules and regulations before participating in the program.
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Dependent Care
Dependent Care Reimbursement Account (DCRA)
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This category allows you to pay for qualified dependent care
expenses for dependents on a pre-tax basis.
With the DCRA, you set aside a conservative amount of monies
pre-tax for your dependent care expenses.
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The monies are reimbursed to you after you submit
a claim validating your expense showing services
have been performed.
By using the account, you save approximately 1530% in taxes on your expenses!
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Dependent Care
Dependent Care Reimbursement Account (DCRA)
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The services must be performed within the program Plan Year to
qualify.

You must report the care providers
Federal Tax Identification or Social
Security number on your tax returns in
order to use this category.
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Dependent Care
Who is a Qualified Dependent?
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A dependent on your Federal income taxes for the
year in which you are filing for reimbursement under
the plan and;
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A dependent under the age of 13 who you
can claim as an exemption or your spouse,
parent or child who is unable physically or
mentally to care for himself/herself and;

A dependent that spends at least
eight hours per day at your
residence and lives at your
residence at least 6 months of the
year.
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Dependent Care
Dependent Care Reimbursement Account
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To qualify, the care must be for
services that allow you (and your
spouse, if you’re married) to be
gainfully employed or to attend
college on a full-time basis or
seek employment during the
hours your dependent is with the
care provider.
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Dependent Care
What is the Maximum I Can Contribute?
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If you are single (or married & filing a joint Federal tax return),
you may contribute up to $5,000 (not to exceed $5,000 in
any given calendar year per family). You are limited to the
amount of your annual earnings if you or your spouse earns
less than $5,000 in a calendar year.

If you are married but filing separate tax returns you are
limited to the lesser of $2,500 or your earned income.
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Dependent Care
What is the Maximum I Can Contribute?
 If you or your spouse are a full-time student, not working,
and have one child in daycare, you may contribute $3,000.
 If you or your spouse are a full-time student, not working,
and have two or more children in daycare, you may
contribute $5,000.
 The maximums listed in the previous slides are per family
maximums not to be exceeded in any given calendar year.
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Dependent Care
How does the DCRA work?
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Estimate your cost during the Plan Year.
The maximum annual per family deduction allowed by
IRS in most cases is $5,000.
Authorize your employer to deduct this amount from your
paycheck in equal installments throughout the Plan Year.
Submit claims to DBS for reimbursement as you incur
expenses.
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Dependent Care
How does the DCRA work?
 DBS reviews your claim and reimburses you
directly for your expenses.
 With dependent care expenses, you can only
be reimbursed the dollar amounts that have
been deducted from your paycheck as of the
date of your claim.
 Always submit the total amount of dependent
care expenses incurred (even if you have not
had that much deducted from your paycheck).
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Dependent Care
How does the DCRA work?
 The excess amount claimed will be entered into a “pending
account”.
 The “pending” amounts will be reimbursed after your payroll
deductions are credited to your account.
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Dependent Care
Dependent Care Reimbursement Account
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An alternative way to save on dependent care expenses is by
taking a tax credit when you file your income tax return.
The tax credit is based on your adjusted gross income. As your
income goes up, the percent of credit you receive on your expenses
goes down.
You should ask your tax advisor which method is best for you. DBS
does not provide tax advice.
You may not use the same expenses for both the Flex Plan and the
Tax Credit.
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Dependent Care
Dependent Care Reimbursement Account

You must file Federal Tax Form 2441 with your income taxes
if you participate in the DCRA.
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Dependent Care
!
Important Note
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
The Dependent Care Reimbursement Account and the Medical
Reimbursement Account are separate categories.
Pre-tax dollars from one account may not be used for expenses
in the other account.
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Dependent Care
What happens if I don’t use all my DCRA money?
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By Federal law, unused monies are forfeited at the end of the
Plan Year’s run-out period.
Because of this rule, you need to plan conservatively.
For most people, it is easy to estimate the amount for the DCRA
as they spend the same amount each week on dependent care.
Note: Most people do not leave any money in this account.
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Dependent Care
In Summary
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The DCRA is an excellent way to reduce your taxes.

Consult your tax advisor to see if this account can benefit you.

Please review the other presentations to learn more about the plan.

Ask your employer how you can enroll in the plan and start reducing
your taxes!
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Dependent Care
Additional questions?
www.dbsbenefits.com
Claim forms may be downloaded from our website.
Diversified Benefit Services, Inc. Customer Service Representatives
are available Monday – Friday 8:30 a.m. – 5:00 p.m. (CST)
1- (800)-234-1229
1- (262)-367-3300
Dependent Care
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Section 125 Plan
Medical
Reimbursement Account
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Medical Reimbursement Account
What is a Flexible Benefit Plan?
The intent of this slide presentation is to provide a brief overview of the
Medical Reimbursement Account area of the Section 125 Flexible Benefit
Plan (Flex Plan).
Please see your employer’s Plan Document for details of the Flex Plan
rules and regulations before participating in the program.
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Medical Reimbursement Account
Medical Reimbursement Account
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This category allows you to pay for your (and
your legal dependents’) qualified medical,
dental, vision, and other eligible expenses on a
pre-tax basis.
The expenses need to be for
out-of-pocket expenses that
are not reimbursed or paid for
by any other sources.
The services must be
performed within the Plan
Year (meaning dates of
service must be within the
Plan Year).
Medical Reimbursement Account
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What expenses qualify in the Medical
Reimbursement Account?
Eligible Out-of-Pocket Expenses Include:
 Medical insurance deductibles, co-pays and co-insurance
 Dental insurance deductibles and co-insurance
 Dental expenses such as exams, caps, crowns, bridges & fillings
 Orthodontia
 Vision exams, glasses, frames, contact lenses & supplies
 Laser eye surgery
 Hearing aids (including batteries)
 Routine exams/physicals/mammograms
 Chiropractor costs
 Prescription drugs
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 Mileage for medical care
Medical Reimbursement Account
Medical Reimbursement Account
Expenses which are NOT eligible include:
Surgery for cosmetic reasons
Breast pump rental
Medical supplies that are not medically necessary
Teeth bleaching/whitening/bonding
Health club membership dues
Over-the-counter vitamins and other dietary
supplements for general health purposes
 Cosmetic drugs
 Marriage counseling
 Group insurance premiums deducted from your paycheck
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Medical Reimbursement Account
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How does the Medical Reimbursement
Account work?
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Estimate your family’s out-of-pocket cost for qualified medical
expenses during the Plan Year.
Ask your Human Resources department for the medical maximum
that is allowed for the Plan Year.
Authorize your employer to deduct this amount from your paycheck
in equal installments throughout the Plan Year.
Submit claims to DBS for reimbursement as you incur expenses.
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Medical Reimbursement Account
How does the Medical Reimbursement Account
work?
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DBS verifies the expense based on IRS
guidelines and reimburses you directly. Note:
other methods for accessing your account may be in place
at your employer.
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Reimbursement is NOT limited to the current
account balance. Your entire annual election
is available for reimbursement when you incur
the expenses.
Monies in the Medical Reimbursement
Account can be used for any expense that
qualifies within the category. For example,
money set aside for your glasses can be used
for your child’s dental care.
Medical Reimbursement Account
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Benefits of the Medical Reimbursement Account
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Tax-free money – you save approximately 15%-30% in
taxes.

Flexible – use the money anywhere within the category.

Ability for reimbursement of the full Plan Year amount if
expenses are incurred early in the Plan Year.
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Medical Reimbursement Account
What if I don’t use all my money?
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According to the Federal rules, unused money is forfeited at
the end of the Plan Year, if all claims are not submitted
during the run-out period.
However, most people do not leave money in the plan
because…
 …they only set aside money for predictable expenses.
 …they submit their smaller expenses for items such as
diabetic supplies, contact lens saline solution, and
medical mileage, to use up their monies.
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Medical Reimbursement Account
Can I claim the expenses in the Medical
Reimbursement Account from my income taxes?

No, the expenses reimbursed under the Medical
Reimbursement Account cannot be used toward Medical
Itemization (Schedule A) on your Federal Tax return.
 Consult your tax advisor to see which method benefits
you most.
 DBS does not provide tax advice.
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Medical Reimbursement Account
!
Important Note
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
The Dependent Care Reimbursement Account
and the Medical Reimbursement Account are
separate categories.
Pre-tax dollars from one account may not
be used for expenses in the other account.
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Medical Reimbursement Account
In Summary:




The Medical Reimbursement Account is an excellent
way to reduce your taxes.
Consult your tax advisor to see if this account can
benefit you.
Please review the other presentations to learn more
about the plan.
Ask your employer how you can enroll in the plan
and start reducing your taxes!
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Medical Reimbursement Account
Additional questions?
www.dbsbenefits.com
Claim forms may be downloaded from our website.
Diversified Benefit Services, Inc. Customer Service Representatives
are available Monday – Friday 8:30 a.m. – 5:00 p.m. (CST)
1- (800)-234-1229
1- (262)-367-3300
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Medical Reimbursement Account
Filing a Section 125
Flexible Benefit Plan Claim
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How to File a Claim
Overview for Claim Filing and Reimbursement
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Incur your medical, dental, vision, dependent care
and other expenses as you normally would.
As you incur expenses, save documentation from
the service providers that verifies your expenses.
At any time during the Plan Year, you may choose
to submit your expenses for reimbursement.
Complete a 125-FSA Claim Form and submit it to
DBS, Inc. with copies of your documentation.
DBS, Inc. substantiates the claim and reimburses
you for your expenses.
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How to File a Claim
Completing the 125-FSA Claim Form
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Make sure to complete and sign the top section of the 125-FSA
Claim Form by printing your full name, e-mail address (if you have
one), name of your employer and your participant ID number
(assigned by DBS, Inc.) or Social Security number.
In addition, complete Dependent Care Reimbursement Account
box for your dependent care expenses and/or the Medical
Reimbursement Account box for your medical, dental, and vision
type expenses.
Claim forms may be mailed or faxed to DBS, Inc. The address and
fax number are shown on the form.
The next slide illustrates how to complete the claim form.
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How to File a Claim
Claim Form
Doe
Claim JonForm
125-FSA Example
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Diversified Benefit Services, Inc.
How to File a Claim
Claim Form – Dependent Care Section
Show the amount of expense incurred, the care provider name
and Social Security or Federal tax ID number, and the dates
during which you incurred the expense. NOTE: you can only claim
services that have been performed. If a representative of the care
provider signs the form, a receipt does not have to be included
with your claim.
Diversified Benefit Services, Inc.
How to File a Claim
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Claim Form – Medical Reimbursement Section
Along with your claim form, include copies of your insurance EOB
forms or itemized bills, that show the date(s) of service, the
amount of your out-of-pocket expense, the name of the Provider
and the type of expense. Retain the originals for your records.
Diversified Benefit Services, Inc.
How to File a Claim
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Types of documentation
Always submit copies of your expense documentation. Keep
the originals for your records.
For the Medical Reimbursement Account, your documents must
show:
1) The type of expense
2) The date of service – not billing date
3) Name of the service provider
4) Your out-of-pocket cost for the expense
Examples of proper documentation to submit include:
Explanation of Benefits forms (EOBs) from insurance companies
Dental or vision invoices showing the above items (not balance
forward statements)
Drug copay slips from the pharmacy
How to File a Claim
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Where do I submit claims?
Submit your signed Claim Form and
expense documentation to:
Diversified Benefit Services, Inc.
P.O. Box 260
Hartland, WI 53029
Or fax claims to:
1- (262)-367-5938
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How to File a Claim
Other Claims Information
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Claims must be for services rendered during the Plan Year.
Claims must be submitted by the end of the claims run-out
period after the end of each Plan Year.
All claims are confidential and will only be seen by a DBS
representative.
You may submit claims as you incur expenses or submit a
claim with multiple expenses and multiple dates of service.
Filing a claim is easy!
Using the Plan saves you approximately 15-30% in taxes on
your expenses.
How to File a Claim
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Additional questions?
www.dbsbenefits.com
Claim forms may be downloaded from our website.
Diversified Benefit Services, Inc. Customer Service Representatives
are available Monday – Friday 8:30 a.m. – 5:00 p.m. (CST)
1- (800)-234-1229
1- (262)-367-3300
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How to File a Claim