Voluntary Deductions: Section 125
![Section 125 Flexible Benefit Programs icon]()
Section 125 Flexible Benefit Programstitle
As a district benefit eligible employee, you are entitled to participate in a Section 125 Flexible Benefit Plan. The plan is provided by American Fidelity Assurance Company. Enrollment opportunities are limited to the plan year dates for your district.
A Section 125 Flexible Benefit Plan allows you, the employee, to select from a list of available benefits that will meet your needs. The benefits that you choose are then paid for with benefit dollars made available by your employer. Salary reduction means that you are able to use pre-tax dollars to pay for certain benefits that you may have previously paid for with after-tax dollars.
By implementing this plan, your employer is helping you reduce your taxes and increase your spendable income. The cost saving advantage of the plan is simple. Any benefit costs or insurance premimums you pay under the plan are paid on a pre-tax basis. The example below illustrates the advantage of the section 125 Plan in comparison to a plan without the benefits.
| WITHOUT SECTION 125 | WITH SECTION 125 | ||
| Average Monthly Salary | $2,000 | Average Monthly Salary | $2,000 |
| Less Estimated Federal & State Taxes (20%) | -400 | Less Your Out-of-Pocket Benefit Cost | -250 |
| Less Estimated FICA (7.65%) | -153 | Taxable Income | $1,750 |
| $1,447 | |||
| Less Your Out-of-Pocket Benefit Costs | -250 | Less Estimated Federal & State Taxes (20%) | -350 |
| Less Estimated FICA *(7.65%) | -133 | ||
| Spendable Income | $1,197 | Spendable Income | $1,2 |
*If you are subject to FICA taxes, there may be a slight reduction in your Social Security benefits due to the reduced FICA contributions.
This planning time is a very important part of you and your family's financial future. Please review the information below. You local American Fidelity Representative will be available to assist you with your enrollment and any questions.
Premium Conversion: A Section 125 Plan allows employees to have eligible insurance premiums taken out of their paycheck before taxes. Eligible insurance benefits include health, dental, vision, disability, cancer and in some cases life insurance.
Dependent Care Expenses: Up to $5,000 per year for dependent care (child/elder care) expenses may be deducted on a pre-tax basis. In most cases your savings will increase using this process instead of the federal tax credit.
Medical Reimbursement: Up to $3,600 per year may be deducted on a pre-tax basis for medical, dental and vision expenses which are not reimbursed by your insurance plans that you incur for treatment of you, your spouse, and your eligible dependents. This includes but is not limited to medical co-payments, orthodontics, eye exams, glasses, contact lenses, and prescription drugs.
PLEASE NOTE: CLAIMS MUST BE FILED NO LATER THAN 90 DAYS AFTER THE PLAN YEAR ENDS. REMEMBER THE USE IT OR LOSE IT PROVISION.
![Protect Your Income icon]()
Protect Your Incometitle
![Protect Your Future icon]()
Protect Your Futuretitle
![Protect Your Family icon]()
Protect Your Familytitle
Cancer Coverage: The American Fidelity cancer policy, with an intensive care rider, can be paid for with pre-tax dollars. The policy highlights include such benefits as annual diagnostic testing, experimental treatment and radiation-chemotherapy charges. All benefits are paid in addition to your medical insurance benefits. This allows you to use the proceeds as you deem necessary.
Life Insurance: Life Insurance isn t for people who die; it s for the people who live. Would your family be well taken care of if suddenly you were not there to provide for them? You should consider if your family would have enough money to make house and car payments, save for your children s education, and still afford a comfortable standard of living. American Fidelity offers permanent and term life insurance to fit your needs.