Education Assistance Plan (EAP) overview:
Education Assistance Plans (EAPs) are designed to support your employees’ educational growth and skill development, covering a variety of expenses with potential tax benefits. These plans enable employees to advance their careers and develop valuable skills by covering costs associated with ongoing education and professional development. This guide provides you with the key information you need to support employees in utilizing this benefit.
What’s covered?
Your company’s Education Assistance Plan defines specific eligible expenses, commonly including:
- Tuition & Fees: Expenses for college, university, and other formal academic programs.
- Course Materials: Textbooks, software, and other necessary supplies.
- Professional Development: Certifications, licenses, and continuing education.
- Student Loan Assistance: Payments toward existing student loans (if included in your plan).
Level provides an intake form during onboarding for your selected plans, which include an exhaustive list of all eligible coverage categories for the selected plan. Please feel free to reach out to your account manager or success@level.com to request our intake form for your review and plan configuration.
Eligibility requirements
Eligibility criteria for the Education Assistance Plan are defined by your company, which may include:
- Employment status: Employers can indicate whether the benefit is eligible for full-time only, or also inclusive of part-time or contract employees.
- Waiting periods: Employers can set a waiting period for new hires before they are eligible for the benefit.
- Enrollment periods: Employers can tie eligibility to specific enrollment periods (e.g. open enrollment).
Auto-enrollment
Automatically enrolls members based on plan enrollment criteria (e.g. employee type, status, location) without a required election by the employee.
Tax information
The IRS allows up to $5,250 per year in tax-free education assistance. Amounts exceeding this limit may be subject to taxation. While the plan is structured to optimize tax benefits, employees are encouraged to consult with a tax advisor or refer to IRS guidelines to understand how these benefits may impact their individual tax situation.
Termination
If an employee’s employment ends, remaining education assistance funds or outstanding balances will be managed according to your company’s termination policy. The specific treatment may vary, so it’s essential to confirm the company’s stance and communicate it to departing employees if needed. All terminated employees will continue to have access to their Level account only to review past transactions and expenses.