Flexible Credit Plans
A Flex Credit plan is a plan with a non-elective contribution, meaning the employee does not elect the amount of the contribution made by an employer. Flex credit plans can be used to pay for a portion of healthcare premiums and/or dependent care expenses. The employer makes a premium contribution and the employee pays for the remainder of the premium. Flex credit plans can also be used for other benefits for example as a reward, and would be treated as a taxable fringe benefit.
Employers can choose what the flex credits will be used for, such as medical premiums, deductibles, or to help employees with the cost of dependent care. Flex credits when used as a credit for premiums or flex plans, are tax deductible to the employer and do not count as gross income to the employee.
Employers can also elect to allow employees to choose to receive flex credits in cash or as taxable benefits. Premiums paid with employer provided flex credits where employees can elect to receive the credit as cash or as taxable benefits, are not treated as employer paid premiums as they relate to the credit for tax advantage purposes.
This content is being provided as an informational tool. It is believed to be accurate at the time of posting and is subject to change. It is recommended that plans consult with their own experts or counsel to review all applicable federal and state legal requirements that may apply to their group health plan. By providing this information, Meritain Health is not exercising discretionary authority or assuming a plan fiduciary role, nor is Meritain Health providing legal advice.