Iowa Bankers Association Iowa Bankers Mortgage Corporation
Iowa Bankers Insurance
and Services
8800 NW 62nd Avenue
PO Box 6210
Johnston, IA 50131
Toll-Free: 800-532-1423
Fax: 515-286-4214

IBBP Customer Service:
    800-258-1415
125 Claim Fax:
    515-286-4244
IBBP Billing Fax:
    515-286-4369

Agent Customer Service:
    800-775-8858

125 Plan Flexible Spending Account (FSA)

125 Plan Flexible Spending Account (FSA)

A Section 125 Cafeteria Plan is a benefit you can provide to your employees which enables them to contribute an amount of their gross income to a designated flexible savings account (FSA). The amount contributed to the FSA is deducted from their pay before federal, state, and Social Security taxes are calculated — so they keep more of their money. They can then use the funds in the account to pay for certain health care and dependent care expenses. On average, a participating employee saves $.25 for every dollar he or she contributes to the FSA.

A Section 125 Cafeteria Plan will reduce the payroll tax liability for employees who participate in your 125 Plan. This tax savings reduces or eliminates the costs associated with offering the plan, and employee satisfaction increases because participating employees have more spendable/take-home income at no cost to you.

Medical Flexible Spending Account (MedFSA)

A medical flexible spending account (MedFSA) allows participating employees to pay for eligible medical expenses with pre-tax dollars. When they have an eligible expense, they submit a claim form with the required documentation, and once the claim is approved and processed, they are reimbursed with tax-free dollars from their account. If they are insured under the IBBP health and/or dental plan those claims are processed and paid automatically through the 125 plan.
 
The amount a participating employee chooses to contribute for the year is taken out of his or her paycheck in equal installments each pay period. However, the total amount elected for the medical reimbursement account is available any time during the year. Unless there is a qualified status change event, the participant cannot change the contribution amount during the year, and if all the money contributed by the end of the year is not used, it is lost. However, you can offer participating employees a grace period of up to two-and-a-half months after the end of the plan year to use their money or a carry over option that allows them to carry over up to $500 into the next plan year. Contact your IBIS marketing reperesentative if you would like more information about the grace period or $500 carryover option.

Dependent Care Assistance Program (DCAP)

A dependent care assistance program (DCAP) account allows a participating employee to pay qualified daycare expense with pre-tax dollars for children under age 13 who reside in their home and adult dependents who are mentally or physically incapable of caring for themselves who spend at least eight hours a day in their household. The participant sets aside part of each paycheck pre-tax to pay for eligible dependent care expenses so they can work.  Once the claim is approved and processed, they are reimbursed with tax-free dollars from their account.
 
Participants can contribute up to $5,000 annually (or $2,500 if married and filing separately) to their DCAP accounts. The amount contributed for the year is taken out of their paychecks in equal installments each pay period. Participants can be reimbursed for their expenses up to the amount contributed so far in the plan year.  Unless there is a qualified status change event, the contribution amount cannot be changed during the year, and if all the money contributed by the end of the year is not used, it is lost. 

Premium Only Plan

The premium only portion of a Section 125 cafeteria plan allows the portion participating employees pay for group insurance to be taken out of their paychecks before state, federal, and Social Security taxes are withheld. Paying these premiums with pre-tax dollars reduces taxable income — which means more take-home pay for participants. Insurance premiums that can be paid for with pre-tax dollars include premiums for group health, dental, vision, and some other supplemental insurance plans, as well as health saving account (HSA) contributions.

Forms, Resources, and Questions

If you provide your employees with a Section 125 FSA Plan through IBIS, you can access related forms and other resources by logging into the IBIS Administrator Website.

If you have questions about the Section 125 Cafeteria Plan, please contact your IBIS Marketing Representative at 800-532-1423 or IBIS Customer Service at 800-258-1415.
 

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Mid America Banking Insurance Services, Inc., a subsidiary of IBIS, provides insurance programs to banks outside of Iowa. 

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The Iowa Bankers Association (IBA) is dedicated to serving Iowa banks and their employees.

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Iowa Bankers Mortgage Corp. (IBMC) offers the products & experience Iowa banks need in the secondary mortgage market.

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