New benefit saves employees money
By RENEE WEBB
Globe associate editor
Posted September 5, 2002

Full-time employees of the Catholic Church in the Diocese of Sioux City - including workers at parishes, schools and other diocesan entities - have access to a new benefit.

This new benefit, which provides for additional allowances to the diocese's medical cafeteria plan, can save the workers a chunk of money.

"We've had the premium-only aspect of the cafeteria plan for several years. People could take their dependent (health care) premium or dental premium on a pre-tax basis," explained Margaret Fuentes, diocesan director of personnel and employee benefits. "What we haven't been able to offer up until now has been the additional pieces of the medical savings part of it for the expenses and the dependent care savings."

This plan covers medical expenses not covered by insurance as well as dental and vision expenses. Some things covered include contact lens and lens solution, prescription drugs, doctor visit co-pays, mileage to visit an out-of-town specialist and psychiatric care expenses.

She acknowledged that part of the reason for offering the premium-only tax savings cafeteria plan in the past was the administrative concern of adding another burden to the payroll people throughout the diocese.

"We didn't want them to have to deal not only with taking those deductions, but having to turn around and pay the claims out," said Fuentes.

With this in mind, the diocese now works with a third party administrator. Eagle Ridge Corporate Services will take away the burden of paying out the claims.

Tim Swedean, one of the owners of Eagle Ridge Corporate Services, pointed out that cafeteria plans have been around for quite a long time but there were not many third party administrators such as Eagle Ridge.

"One of our great selling points is the fact that we can turn around medical claims in a one day period," he noted. "Many third party administrators do not provide that quick of turn around time."

After the employee incurs the medical expense, they send the claim usually via fax directly to Eagle Ridge and the company cuts a reimbursement check.

In recent weeks, Fuentes has facilitated meetings to inform employees of the new medical savings portion of the plan and also the tax saving benefit of cafeteria plans in general.

After enrollment meetings, bookkeepers at every site are informed of the dollar amount that each employee would like to deduct for an entire year and how that translates to the pay period. For instance, an employee may opt to hold $100 each pay period.

The bookkeeper or secretary at the parish or school will set up that deduction on the payroll system. When they run the payroll, they will issue another check that is sent to Eagle Ridge.

"Individuals, as they incur medical or dependent care expenses, will send a claim form into Eagle Ridge and they will cut a check out of that pool of collected dollars," said Fuentes.

Swedean pointed out that two of the most common things that people have done after electing this plan are braces for their children or laser eye surgery.

"Basically, it is a tax-free, interest-free loan to get the services you need now. Then you spend the rest of the year, in equal payments, paying it back," she said.

Fuentes said there was a three-fold value in offering this plan.

First, the employee receives a tax savings because they do not pay federal tax, state tax or FICA on the amount. It provides a direct reduction in the amount of taxable wages. Second, it enables employees to get the services they need right away. For example, if they need a hearing aid they can pay for it right away rather than having to make payments to a business or put it on a credit card.

"The employer wins too." Fuentes explained, "The employer is not paying the employer share of FICA on that amount of money either. Even though there is an administrative fee from Eagle Ridge to each location per each participant, they will more than likely cover it with the FICA savings."

Swedean, a parishioner at St. Michael Church in Sioux City, pointed out that care should be taken when estimating the dollar amount that goes into the plan as it is a use it or lose it proposition. He recommended that people go through their checkbook for the last year when determining how much to put into the cafeteria plan.

"We are very excited to be working with the diocese. We think this is a benefit that is really important to all diocesan employees and we are very glad to provide this for them," he said.

There is still time for locations and priests to enroll in this plan. For more information about the plan, contact Fuentes at (712) 233-7510.