What is Open Enrollment?
The open enrollment period allows you to review, change or continue benefit elections every year. Keep in mind that benefit plan changes are only allowed throughout the plan year if it is during open enrollment or you have a qualified Section 125 event. During open enrollment, you can do the following:
- Elect or decline coverage, in addition to changing existing coverage.
- Review personal information and verify that covered dependents are named on the plan. (If there are inconsistencies between your personal and/or benefit information, you will need to notify your employer.)
- Confirm that the correct dependents are selected in order to be covered for every benefit including medical, dental, vision, etc.
Section 125 Plan Information and Rules
A Section 125 Plan provides a tax-saving way to pay for eligible medical or dependent care expenses. The funds are automatically deducted from your paycheck on a pre-tax basis.
Here’s How It Works
A Section 125 Plan reduces your taxes and increases your spendable income by allowing you to deduct the cost of eligible benefits from your earnings before tax. Plus, the plan is available to you at no cost, and you’re already eligible – all you have to do is enroll.
Is It Right for Me?
The savings you may experience with a Section 125 Plan are outlined in the example below. For instance, you could potentially take home about $70 more each month if you participated in your employer’s Section 125 Plan – that’s a savings of $840 a year!
You cannot change your benefit elections for the plan year unless the benefits office receives notification in writing within 31 days of the status change. If the benefits office is not notified within 31 days of the status change, no benefit change can be made until the next annual open enrollment.
IRS specified changes in family status include:
- Change in legal married status
- Change in number of dependents
- Termination or commencement of employment
- Dependent satisfies or ceases to satisfy dependent eligibility requirements
- Change in residence or worksite that affects eligibility for coverage
Section 125 Sample Paycheck*
WITHOUT S125
| Monthly Salary | $2,000 |
|---|---|
| Less Medical Deductions | – N/A |
| Taxable Gross Income | $2,000 |
| Less Taxes (Fed/State @ 20%) | -$400 |
| Less Estimated FICA (7.65%) | -$153 |
| Less Medical Deductions | -$250 |
| Take Home Pay | $1,197 |
WITH S125
| Monthly Salary | $2,000 |
|---|---|
| Less Medical Deductions | -$250 |
| Taxable Gross Income | $1,750 |
| Less Taxes (Fed/State @ 20%) | -$350 |
| Less Estimated FICA (7.65%) | -$133 |
| Less Medical Deductions | – N/A |
| Take Home Pay | $1,267 |
*The figures in the sample paycheck above are for illustrative purposes only.
This site contains a summary of the benefits offered by your employer. If there is a conflict between the terms of this outline of benefits and the actual contracts, the terms of the contracts will prevail.
