Flex Plan 2 Example

  • Gives employees flex credits based on the benefits they elect. The flex credits can be used to purchase other benefits.

  • Creates one standard time record for each employee using the flex plan's flex pay code.

  • Increases available flex credits when employees elect benefits with negative premiums.

  • Reduces available flex credits when employees elect benefits with positive premiums.

  • Shows only the net gain from benefit elections on employee payments when an employee receives more flex credits than he or she has spent.

  • Uses flex company deductions to show spent flex credits on payments.

To create the second flex plan, ABC Foods assigns a flex pay code only to the flex plan. A flex company deduction is assigned to each benefit plan.

Employees in ABC Food's second flex plan can keep all of their unspent flex credits.

Creating flex credit Records for Employees

ABC Foods runs BN145 (flex credits Calculation) to create flex credit records based on the flex credit and pretax parameters on BN08.1 (flex credits). The flex credit record shows that employees have $5,000 pretax dollars to spend on benefits. Because employees receive no flex credits before they elect benefits, BN145 creates no flex credits and no standard time records.

Enrolling Employees in Benefits

Benefits in this kind of flex plan have negative and positive premiums.

When you enroll an employee in the first benefit with a negative premium, the Benefits Administration application

  • Increases the employee's available flex credits

  • Creates a standard time record for the employee using the flex pay code from the flex plan

When you enroll an employee in additional benefits with negative premiums, the Benefits Administration application

  • Increases the employee's available flex credits

  • Increases the employee's existing standard time record

When you enroll an employee in a benefit with a positive premium, the Benefits Administration application spends flex credits first, then pretax dollars. When all flex and pretax dollars are spent, the Benefits Administration application spends after-tax dollars.

When an employee spends flex credits to pay for a benefit, the Benefits Administration application

  • Reduces the employee's available flex credits

  • Reduces the employee's standard time record (when the employee uses all of his or her flex credits, the standard time record is deleted)

  • Creates a flex company deduction for the cost of the benefit

When all flex credits have been spent and the employee uses pretax dollars to pay for a benefit, the Benefits Administration application

  • Reduces the employee's available pretax dollars

  • Creates a pretax deduction for the employee for the cost of each benefit

When the employee has spent all of his or her pretax dollars and the application uses after-tax dollars to pay for a benefit, the application

  • Creates an after-tax deduction for the cost of the benefit

Example

Mark's benefits are:

Flex vacation (sold 10 hours) $115-
Dental $130-
Health $50

When Mark elects the flex vacation benefit that gives him $115 flex credits, the Benefits Administration application

  • Increases Mark's available flex credits to $115

  • Creates a standard time record for Mark for $2.21 ($115/52)

When Mark elects the dental benefit that gives him $130 flex credits, the Benefits Administration application

  • Increases Mark's available flex credits to $245 ($115 + 130)

  • Increases his standard time record to $4.71 ($245/52)

If Mark elects no more benefits, his taxable wages are $1,004.71 ($1,000.00 + 4.71), as shown on the payment below.

Wages Deductions
Regular pay $1,000.00 None
flex credits 4.71
Totals $1,004.71
Taxable wages $1,004.71

Mark elects a health benefit that costs him $50. Because Mark has flex credits available, the Benefits Administration application

  • Reduces Mark's available flex credits to $195 ($245 - 50)

  • Reduces Mark's standard time record to $3.75 ($195/52)

  • Creates a flex company deduction of $0.96 ($50.00/52) for the cost of the benefit

If Mark elects no more benefits, his taxable wages are $1,003.75, as shown on the payment below.

Wages Deductions
Regular pay $1,000.00 Health-flex company $0.96
flex credits 3.75
Totals $1,003.75
Taxable wages $1,003.75