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FROM THE PRESiDENT
Open enrollment for the HRi Flexible
Spending Plan is upon us. The vast majority of people will ignore the
opportunity without understanding its benefits. When asked about the plan,
most employees respond, saying “not interested”. When asked why, the typical responses are: 1) I do not understand it and do not
want to take the time to learn; 2) I know someone who lost money in the
program because they did not get it all back; or 3) It is too much
paperwork.
Since the tendency is to say
"no" without listening, many people don’t realize that the medical portion
of the HRi Flexible Spending Plan could save
them up to $1,200 in taxes. Many people believe the plan only covers
deductibles and copays. While the plan will cover
these items, it also covers laser eye surgery, many dental and orthodontia
treatments, certain items denied by your insurance company and several over
the counter products (including aspirin, ace bandages, cough medicine,
etc.). Moreover, some employees believe they must have health insurance
under an HRi sponsored policy to enroll. The truth
is that an individual can participate regardless of their health plan, even
if they do not have health coverage.
Although it is possible to lose money in
the plan, most people do not. As the end of the year approaches, you can
always buy new glasses, prescription sunglasses or go the drug store for a
myriad of things. Even those people who lose money rarely lose enough to
wipe out their entire tax savings.
We have greatly improved the
administrative process over the years. Yes, it is necessary to collect and
submit receipts, but the turn-around time is quick. Remember, you can send
receipts in as you acquire them, or you can save them and send them in at
one time. Suppose sending in the forms at year-end takes an hour, and
yields $1,000 in tax savings, is it worth it?
This only addresses the medical side. The
HRi plan also includes the ability to pay daycare, transportation, and
parking on a pretax basis. By participating in every aspect of the Plan, an
individual could realize up to $3,000 in tax savings. Please contact your
Client Services Specialist to learn more about the Flexible Spending Plan.
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Greetings!
Welcome
to the November 2005 edition of DiRECTIONS. In this issue, Tim discusses
the advantages of participating in the Flexible Spending Plan. Then, we
introduce the new online enrollment interface for the plan.
Next,
we offer some 401(k) and year-end related information with
regards to contribution levels, tax changes and reminders.
Finally, we invite you to participate in our Flexible Spending Survey.
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Take Advantage of Flexible
Spending!
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In his feature article, Tim discussed
the value of participating in the Flexible Spending Plan. Think back
over the last year. In 2005, did you spend money out of your own pocket
for dental work, orthodontics, prescription copays,
doctor visit copays, Advil, contact lenses,
Band-Aids, daycare, and/or summer camp? If you answered yes to any of
these questions, you could have increased your take home pay for the
year by participating in HRi's Flexible
Spending Plan.
We have made it easier to enroll for
the 2006 plan year. Simply click the link below to enroll online!
Please note that the enrollment deadline is December 15, 2005. You userid is your social security number (no dashes)
and your password is your 8 digit birthdate
(MMDDYYYY).
If you have problems accessing the
site, or any other questions, please contact your Client Service
Specialist.
Eflex Online Enrollment
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401(k)
Contribution Limits
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With the upcoming New Year, please
take note of the following changes in 401(k) Contribution Limits:
- Regular deferral maximum raised to $15,000
- Age 50 Catch Up deferral maximum raised to
$5,000
Changes in deferral limits become
effective on January 1, 2006, so we ask that you please submit any
Deferral Change forms before December 15, 2005.
Please note that if you plan to
contribute the maximum allowed for 2006, follow these steps to
distribute your deferrals over the entire year and allow for the full match
provided by your employer:
- Step 1 - Divide the maximum deferral allowed by
number of expected pays.
- Step 2 - Submit a Deferral Change Form
requesting a per pay period deduction equal to the amount
determined in Step 1.
If you are not contributing and want
to know if you are eligible, contact your Client Services Specialist.
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Year-End
Reminders
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Please observe the following changes
for the 2006 year:
- FICA wages basis raised
to $94,200, up from $90,000.
- Standard mileage rate has not yet been
determined for 2006. Rates for 2005 were 40.5 cents per gallon
from January through August and 48.5 cents per gallon from
September through December 2005.
- Minimum Wage remains $5.15 per hour.
As the end of 2005 approaches, you
will receive a reminder to check your name, address and social security
number for accuracy. You will also receive a letter asking you to
update your beneficiaries for your 401(k) and Guardian Life Insurance.
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