Flex Plan 3 Example

  • Gives employees flex credits based on the benefits they elect. The flex credits are not used to purchase other benefits.

  • Creates multiple standard time records for each employee using each benefit plan's flex pay code.

  • Does not increase available flex credits when employees elect benefits with negative premiums.

  • Does not reduce available flex credits when employees elect benefits with positive premiums. Pretax deductions are created for the cost of benefits.

  • Shows the total flex credits received on employee payments. Benefit elections are shown as pretax deductions.

  • Does not use flex company deductions.

To create the third flex plan, ABC Foods assigned a flex pay code to the flex plan and to each benefit plan under the flex plan.

Each employee in ABC Food's third flex plan can keep all of his or her 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 indicates 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.

Each time you enroll an employee in a benefit with a negative premium, the Benefits Administration application

  • Does not update the employee's available flex credits because the flex credits from benefits with negative premiums are not available to purchase other benefits

  • Creates a standard time record for each benefit using the flex pay code on each benefit plan

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

When 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 Benefits Administration 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 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 creates another standard time record for $2.50 ($130/52).

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 vacation hours 2.21
Dental plan 2.50
Totals $1,004.71
Taxable wages $1,004.71

Mark elects a health benefit that costs him $50. When the employee uses pretax dollars to pay for a benefit, the Benefits Administration application

  • Reduces Mark's available pretax dollars to $4,950 ($5,000 - 50)

  • Creates a pretax deduction of $0.96 ($50/52) for the cost of the health benefit

If Mark elects no more benefits, his taxable wages are $1,003.75 ($1,004.71 - 0.96), as shown on the payment below.

Wages Deductions
Regular pay $1,000.00 Health-pretax $0.96
Flex vacation hours 2.21
Dental plan 2.50
Totals $1,004.71 $0.96
Taxable wages $1,003.75