This chapter contains the following topics:
To create and maintain flexible spending accounts
To process claims
Flexible spending accounts allow employees to use pre-tax dollars to cover certain expenses, such as dependent care and non-reimbursed medical care. When an employee chooses to participate in a flexible spending account, you deduct pre-tax dollars from the employee's pay and place the money into one or more flexible spending accounts. When the employee incurs an expense and makes a claim, you reimburse the employee from the corresponding flexible spending account.
For example, an employee could enroll a child in a day care program that costs 400.00 per month. Without a flexible spending account, the employee must pay the 400.00 with after-tax dollars. With a flexible spending account, the employee can make a claim against the dependent care spending account for the 400.00 and pay the fee with pre-tax dollars. In this case, the employee saves an amount equal to the taxes normally paid on the 400.00.
To maintain flexible spending accounts for the employees in your company, complete the following tasks:
Work with enrollment information
Work with claims
Review flexible spending account reports
Process flexible spending accounts at year-end
Federal regulations define the standards for flexible spending accounts. You should obtain a copy of these regulations. This guide does not attempt to define or replace the regulations. The Benefits system allows you to maintain and manage flexible spending accounts for the employees in your company.
You can use the Benefits system to establish the yearly contribution that each employee makes to each flexible spending account. You can process claims and reimbursements in accordance with the federal guidelines.
If your company uses the JD Edwards World Payroll system, you can reimburse employees by either an automatic deposit or a check. The reimbursement is not included on the employee's paycheck or automatic deposit notification, it is a separate payment.
You can use online forms and reports to review flexible spending account information, claim information, and detailed account information. Additionally, you can run year-end reports to provide employees with information and balance the flexible spending accounts.