Sample Flexible Spending Account Forms Letters
Transcription
Sample Flexible Spending Account Forms Letters
Sample Flexible Spending Account Forms Letters and Reports Page 54 Data Gathering Form – Used to gather data about the client and their plans during the implementation stage. 59 Sample FSA Brochure – Given to eligible employees prior to or during open enrollment. This form may be customized to meet the needs of each client. 73 Section 213 Eligible Expense List – Given to eligible employees prior to of during open enrollment. It is also part of our welcome package that we send out to all newly enrolled participants at the beginning of each plan year. This form can be customized to meet the needs of each plan. 82 Sample employee debit card brochure 85 Sample Employer debit card brochure 88 Sample Enrollment Form 89 Sample Welcome Letter – Sent in the Welcome package to all enrolled participants at the beginning of each plan year. All Welcome Packages are customized to meet the needs of each client. 92 Active Employee Report – This report is sent out as part of the monthly billing and reporting cycle. It is also available on our web site and is updated daily. 94 Employee Account Balance Report – This report is sent out as part of the monthly billing and reporting cycle. It is also available on our web site and is updated daily. 98 Sample Explanation of Benefits and Payment Check – This EOB is sent out after for each processed claim. Participants who elect ACH will still receive this EOB. 100 Sample Close To The Year End Warning Letter – This letter is sent out typically in the 10th month of the plan year and will alert each participant of their account balance. 2 of 101 Sample Flexible Spending Account Forms Letters and Reports 53 of 101 Data Gathering Form – Used to gather data about the client and their plans during the implementation stage. 54 of 101 HR SIMPLIFIED FSA DATA GATHERING FORM Name of Organization: __________________________________________________________ (Enter name exactly as it appears on tax returns and is to appear in the documents .) Federal Employer ID No: _______________________ Date Incorporated/Organized:_________ Mailing Address: _______________________________________________________________ City: ___________________________________ State: ___________ Zip: ___________ Street Address: _______________________________________________ Zip: ___________ Organization Type: Corporation. Sub-chapter "S" Corporation Professional Corporation Professional Association Partnership Sole Proprietorship Government Agency LLC Limited Liability Company Other ______________________________________________ NOTE: Only employees can participate in a cafeteria plan. Thus, while partnerships, sole proprietorships and Subchapter “S” corporations may sponsor cafeteria plans, the following cannot participate: sole proprietors, partners, and greater than 2% shareholders in Sub-chapter “S” corporations. The Employer/Organization entity is operating pursuant to the laws of the State of . Principal Business Activity Code: ___ ___ ___ ___ ___ ___ Nature Of Business: ____________________________________________________________ PLAN ELECTIONS Plan No.: 501 Plan Begin Date: ______ Plan Name: Section 125 Cafeteria Plan ____/____/____ Plan Effective Date: ____/____/____ Plan End Date: ____/____/____ First Year Effective Date: ____/____/____ ELIGIBILITY REQUIREMENTS 1. The following class of employees is eligible to participate: All Salaried Employees Only Hourly Employees Only Other ____________________________________________________________________ Tax penalties may be imposed if the Plan contains eligibility requirements that have the effect of favoring highly compensated employees. Consult your tax advisor before limiting participation in the Plan. 55 of 101 PAGE 2 DATA GATHERING FORM 2. The following employees are excluded from participation: No exclusions. Part-time employees normally expected to work less than _______ hours a week. Employees under the age of _______. Union employees (unless the bargaining agreement provides for coverage). Non-resident aliens. Other: _______________________________________________________________ Section 125 does not specifically provide for election exclusions. Consult your tax advisor before excluding any classification(s) of employees. 3. The service period employees must complete before being eligible to participate is as follows: For the initial plan year, any one employed on the Plan Effective Date and for subsequent Plan Years As of date of hire. Number of days after date of hire: _________ Number of months after date of hire: ____________ For all plan years As of date of hire. Number of days after date of hire: _________ Number of months after date of hire: ____________ Employees must be in service or on the job as one of the eligibility requirements. 4. Once the employees are eligible, they can begin participating in the plan: Date employee becomes eligible. First day of pay period following the date employee becomes eligible. First day of month following the date employee becomes eligible. First day of quarter following the date employee becomes eligible. First day of Plan Year following the date employee becomes eligible. 5. Termination of FSA coverage: Event date End of month BENEFITS Check the benefits to be offered under this Plan: Core Health Benefits Non-Core Supplemental Health Benefits Group Term Life Benefits Short Term Disability Benefits Long Term Disability Benefits PRO PLUS FSAS 56 of 101 Cash Benefits Medical and Dental Expense FSA Dependent Care FSA Vacation Purchase Program Individually Owned Health Insurance SECTION 125 CAFETERIA PLAN JUNE 1999 PAGE 3 DATA GATHERING FORM CONTRIBUTIONS Overall Maximum for all Benefits: $_______________ Cannot be beyond reach of all employees. Rule of thumb: Do not exceed estimated annual salary of lowest paid eligible employee on the payroll which will be prorated for any Plan Year less than 12 months. Medical/Dental: FSA: Minimum: $_______________ Maximum: $ _________________ Dependent Assistance: Minimum: $_______________ Maximum: $ _________________ Dependent Care contributions cannot exceed $5,000 or, if Participant is married and filing separately, $2,500. REIMBURSEMENTS Claims Closing Date: ____/____/____ (Last day to submit claims after the plan year ends for active employees) Claims Grace Period: _________ (For terminated employees - number of days to submit claims after employee terminates or no longer participates in the plan) Use Up Clause for Dependent Care Yes No (Are claims incurred for Dependent Care after termination but before plan year end allowable?) Minimum Check Amount: $25.00 Reimbursement checks for claims will be issued: Every payday ______ times a month. ______ days after claim is received. Reimbursements must be paid at least once a month. BENEFIT COORDINATOR The Benefit Coordinator is the individual at the Employer to whom Employees should direct communications and inquiries. Name: _______________________________________________________________________ Title: ________________________________________________________________________ Company Name: _______________________________________________________________ Address: _____________________________________________________________________ City ___________________________________ State:_________Zip: _________________ Telephone ___________________________ Alternate Phone: _________________________ e-mail ______________________________ Website: ________________________________ BANK ACCOUNT Name of Bank: ________________________________________________________________ Bank Address:_________________________________________________________________ Bank City: ____________________ Bank State: _______ Bank Zip Code: _______________ Name on Account: _____________________________________________________________ Account Number: ______________________________________________________________ Bank Routing No. (MICR) (Ex: 123456789): ____________________________________________ Bank Routing No. (Bank Info) (Ex: 111-42/348): ________________________________________ PRO PLUS FSAS 57 of 101 SECTION 125 CAFETERIA PLAN JUNE 1999 PAGE 4 DATA GATHERING FORM Person Signing Check: __________________________________________________________ DEDUCTION AND PAYMENT LIMITATIONS Are all the employees paid on the same schedule? Yes No The employees are paid as following: (Enter as many frequencies as are needed.) Weekly First pay date after effective date:_________________________________ Biweekly First pay date after effective date: ____________________ Semi-Monthly First pay date after effective date: ____________________ Second pay date after effective date: __________________ Monthly First pay date after effective date:_________________________________ Other _______________________________________________________________ The deductions are taken: Each time the employee is paid, or __________________________________________________________________________ PRO PLUS FSAS 58 of 101 SECTION 125 CAFETERIA PLAN JUNE 1999 Sample FSA Brochure – Given to eligible employees prior to or during open enrollment. This form may be customized to meet the needs of each client. 59 of 101 Using Your Flexible Benefit Plan 60 of 101 FLEXIBLE SPENDING ACCOUNTS Imagine being reimbursed for out of pocket healthcare and dependent care expenses with tax-free dollars! By taking advantage of current tax law, Flexible Spending Accounts allow you to stop imagining and begin saving. Flexible Spending Accounts (FSA) allow you to pay eligible healthcare and dependent care expenses with pre-tax dollars. You will not pay federal or social security taxes and in most cases, state or local taxes on funds deducted for your plan. By using pre-tax dollars you are able to stretch your hard earned money by 28% to 43% on every dollar you choose to contribute to your FSA plan depending on your tax bracket. Tax savings result in increased after tax income. HOW DOES IT WORK? SIMPLE. The amount you elect is deducted from your paycheck and stored in your individual FSA account until you need it. As often as you like you can request reimbursement by filling out a claim form provided to you and submitting it along with your receipt to HR Simplified. A check will promptly be sent to you for expenses you have incurred. WILL IT WORK FOR ME? Almost everyone has a number of necessary predictable expenses that are not covered by their insurance programs. You can pay for your out of pocket healthcare expenses for yourself, your spouse or your dependents incurred during the plan year. If you have medical expenses such as prescription co-pays, prescription eyeglasses, chiropractic services, or childcare expenses an FSA account will work for you. There are two types of reimbursement accounts in which you can have money deducted from your payroll check before taxes: Health Care Expenses reimbursement for a wide variety of things such as medical copays and out of pocket expenses, dental, orthodontia, eyeglasses, many over the counter drugs, etc. Dependent Care Expense reimbursement for day care expenses for your qualified dependent/child. This brochure will help you understand Flexible Spending Accounts. It covers how Flexible Spending Accounts work and describes the two accounts in detail, explains the rules governing the accounts, the reimbursement process, and how you can elect to participate in the Flexible Spending Accounts. Prior to electing to participate in an FSA, it is important that you read and understand this brochure. This brochure is not intended to replace your employer’s Summary Plan Description. After you read this material, if you have any questions, please feel free to contact the flexible spending department at HR Simplified at 866/812/4812.. HR Simplified, Inc www.hrsimplified.com 866-812-4812 952-544-2902 2 of 2 61 of 101 WHAT TO THINK ABOUT BEFORE ENROLLING There is typically a minimum reimbursement check amount of $25.00 with the exception of endof-year claims processing. Any money you do not use from an FSA for expenses incurred during a plan year will be forfeited. This is governed under the IRS “use-it-or-lose-it” rule. To avoid forfeiting any money, you should estimate your expenses very carefully. Most groups allow for a 60 or 90 day grace period to submit all your claims for expenses incurred during the prior plan year. Please check you plan document for the length of time your plan allows. IRS regulations do not allow money to be transferred between reimbursement accounts. You cannot transfer unused funds from Healthcare to Dependent care accounts or the other way around. You may elect to have your claims paid by check or have funds directly deposited into your account if your group has that option. The Direct Deposit Authorization form will be included in your Flex Spending kit. Once you have enrolled in an FSA, you may NOT make any changes to your election unless you have a change in family status such as: Marriage Divorce Birth or adoption Gain/involuntary loss of spouse’s medical or dental coverage Change in your spouse’s employment status Death of a dependent (child or spouse) Unpaid FMLA or Non-FMLA leave Change in Dependent Care providers Should one of the above occur during the plan year, you might be able to change or revoke your current election. The change in election must be consistent with the change in status that has occurred. You must contact your Benefits department for the necessary forms within 30 days of the change in status. HEALTHCARE REIMBURSEMENT ACCOUNTS Most people have a number of necessary, predictable expenses that are not covered by their insurance plans. The Healthcare Reimbursement Account will allow you to pay for these expenses with pre-tax dollars. With this account, you can pay for your out of pocket healthcare expenses for you and your eligible dependents that are incurred during your plan year and while you are an active participant. In general, eligible expenses are “health care” expenses, which have not been reimbursed and are not reimbursable from another source (i.e. insurance). The definition of “heath care” expenses includes amounts paid “for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body.” Note that prevention in this regard means that the disease or medical condition already exists or is imminently probable. In addition, the care or treatment must be directly related to the particular condition. This does not include expenses for care or treatment, which are merely beneficial to general health or cosmetic in nature. HR Simplified, Inc www.hrsimplified.com 866-812-4812 952-544-2902 3 of 3 62 of 101 Transportation expenses, which are primarily for and essential to medical care are also considered eligible expenses. EXAMPLES OF ELIGIBLE EXPENSES The following table lists some of the eligible expenses as defined by IRS Code 213: Acupuncture Adoption-medical expense Alcoholism Treatment Ambulance Artificial Limbs and Teeth Birth Control Pills Chiropractors Christian Science Practitioners Coinsurance/deductibles-related services Contact Lenses/Solutions Crutches Dental Treatment Diagnostic Services Drug Addiction Treatment Eye Exams/Glasses Flu Shots Hearing Aids/Batteries Immunizations/Vaccines Insulin Laboratory Fees Learning Disability Tuition Fees Laser Eye Surgery Medicines Nursing Services Operations/Surgery Optometrists Osteopath Physical Therapy Prescribed Massage Therapy Psychiatric Care Psychoanalysis Psychologist Smoking Cessation Sterilization Wheelchair X-Rays EXAMPLES OF OVER THE COUNTER DRUGS Allergy Prevention & Treatment Benadryl, Sudafed, Actifed, Chlora, Trimaton, and Nassalcrom Antacids and Acid Reducers Gas-X, Maalox, Mylanta, Tums, AXID, AR, Pepcid AC, Prilosec OTC, Tagamet HB, and Zantac 75, AXID AR, Pepcid AC Antidiarraheal and Laxitives Ex-Lax, Pepto-Bismol, Immodium A.D. and Kaopectate Cough Suppressants Robitussin, Vicks 44, Chloraseptic Internal Analgesic/antipyretic Advil, Aleve, Children’s Motrin, Nuprin, Excedrin, Tylenol, Bayer Smoking Cessation Commit, Nicoderm CQ, Nicorette, Nicotrol For a more complete list of allowable over the counter drugs please refer to the Section 213 list of eligible expenses. EXAMPLES OF EXPENSES THAT ARE NOT ELIGIBLE Bottled Water Breast Augmentation Cosmetic Surgery Custodial Care in an Institution Diaper Services Electrolysis Funeral Expenses HR Simplified, Inc www.hrsimplified.com 866-812-4812 952-544-2902 Hair Transplants/Removal Insurance Premiums Marriage/Family Counseling Non-therapeutic Massage Therapy Vitamins for general health 4 of 4 63 of 101 Some other expenses that you incur during the year may not be eligible for reimbursement under current IRS regulations such as: Healthcare expense not yet rendered. Healthcare services do not have to be paid, but must have been rendered during the plan year and while an active employee to be eligible for reimbursement. Insurance premiums are not eligible for reimbursement through your FSA account. This includes contact lens insurance. Expenses paid by an insurance company are not eligible for reimbursement-only the portion you have to pay out of your pocket for your healthcare and dental expenses for reimbursement. Certain expenses require a letter of medical necessity from your doctor in order for you to be reimbursed from your FSA. The letter must state specifically what illness or disease is being treated or prevented and the length of time you will be required to use this treatment. Two examples are: Massage Therapy Weight loss programs. Qualified expenses include behavioral counseling, nutritional counseling, pharmacology and surgery rendered by a licensed professional. Meals and nutritional supplements, health club dues and over-the-counter products are NOT reimbursable. REIMBURSEMENTS PRIOR TO FULL DEDUCTIONS You may submit medical claims for reimbursement that exceed your current account balance but not in excess of your annual elections. The funds that you are reimbursed will be recovered as deductions continue to be deposited into your account throughout the plan year. To obtain reimbursement from your FSA, you must complete a claim form and attach itemized receipts from the service provider or EOB’s (Explanation of Benefits) from your insurance company. Itemized receipts must include: Name of employee or dependent receiving care Dates of service (must be within the plan year) Name of Service Provider Charges incurred Amount paid by insurance company Canceled checks, bankcard receipts, credit card receipts and credit card statements are NOT acceptable forms of documentation. You are responsible for paying your healthcare provider directly. Each employer sets his or her own maximum and minimum contribution limit. HR Simplified, Inc www.hrsimplified.com 866-812-4812 952-544-2902 5 of 5 64 of 101 HEALTHCARE REIMBURSEMENT… Which is Better for You? After tax or before tax? Let's look at an example using $150.00 monthly of reimbursable expenses both ways -with and without a Flexible Spending Account. Tax Savings Example $30,000 Income NO FSA FSA GROSS MONTHLY INCOME PRE-TAX HEALTHCARE EXPENSES $2,500 0 $2,500 $150 TAXABLE INCOME FEDERAL TAX (15%) STATE TAX (5%) FICA TAX (7.65%) $2,500 $375 $125 $191 $2,350 $352 $117 $179 AFTER-TAX HEALTHCARE EXPENSES $150 $0 MONTHLY SPENDABLE INCOME $1,359 Tax Savings $23.00 $ 8.00 $12.00 $1,485 FSA SAVINGS TOTAL: $43 PER MONTH $516 PER YEAR Tax Savings Example $60,000 Income NO FSA FSA GROSS MONTHLY INCOME PRE-TAX HEALTHCARE EXPENSES $5,000 $0 $5,000 $150 TAXABLE INCOME FEDERAL TAX (28%) STATE TAX (5%) FICA TAX (7.65%) $5,000 $1,400 $250 $383 $4,850 $1,358 $242 $371 AFTER-TAX HEALTHCARE EXPENSES $150 $0 MONTHLY SPENDABLE INCOME $2,817 $2,879 FSA SAVINGS TOTAL HR Simplified, Inc www.hrsimplified.com 866-812-4812 952-544-2902 Tax Savings $42.00 $ 8.00 $12.00 $62 PER MONTH $744 PER YEAR 6 of 6 65 of 101 THE BETTER YOU PLAN! THE MORE YOU SAVE! In the example for $60,000 income, the employee has no tax savings to show for the $4,320 in after-tax Healthcare expenses. In fact, not until expenses exceed 7.5% of Adjusted Gross Income would any taxes be saved. By comparison, if the employee had placed $4,320 in a Flexible Spending Account, he or she would have realized a tax saving of $1,764, which translates into a $1,764 increase in spendable earnings. Note: This example makes general assumptions as to the tax liability in this situation. Your actual taxes depend on your personal situation. How to Set Up Your Healthcare Reimbursement Account STEP ONE Carefully estimate your eligible healthcare expenses for the upcoming year. You should use the special Expense Estimation Worksheet on page 11 to help you to determine your annual healthcare expenses. STEP TWO Determine your contributions. Contact your employer to obtain an enrollment form, which instructs your company to set aside a certain amount of money for your expenses. This amount will be contributed on a pre-tax basis from each of your paychecks to your Healthcare Spending Account. Remember the amount you select will be set aside before any federal, social security, or, in most cases, state taxes are calculated. HR Simplified, Inc www.hrsimplified.com 866-812-4812 952-544-2902 7 of 7 66 of 101 DEPENDENT CARE REIMBURSEMENT ACCOUNT INTRODUCTION The Dependent Care FSA allows you to pay for day care expenses for your qualified dependent/child with pre-tax dollars. ELIGIBILITY REQUIREMENTS Eligible dependents are defined as: Under age 13 Physically or mentally unable to care for themselves such as: Disabled spouse Disabled child Elderly parents that live with you For dependent care expenses to be eligible for reimbursement, you must be working during the time your eligible dependents are receiving care. If you are married, your spouse must be either Working at the time the day care services are rendered A full-time student for at least 5 months during the year Mentally or physically disabled and unable to provide care for him or herself In the event of divorce, non-custodial parent cannot make a claim unless they have custody 6 or more months per year CONTRIBUTION LIMITS The annual maximum contribution may not exceed the lesser of the following: $5,000 ($2,500 if married filing separately) Your wages for the year or your spouse’s if less If a spouse is disabled or a student the maximum is $200 for one child $400 for two or more The maximum is reduced by a spouse’s contribution to a Dependent Care FSA The annual minimum contribution for a plan is set by each employer. REIMBURSEMENT IS NOT IN ADVANCE OF DEDUCTIONS You will only be reimbursed for up to your account balance at the time you submit your claim. If your claim is for more than your account balance, the unreimbursed portion of your claim will be tracked by us. You will be automatically reimbursed as additional deductions are taken and deposited into your account, until your entire claim is paid out. HR Simplified, Inc www.hrsimplified.com 866-812-4812 952-544-2902 8 of 8 67 of 101 HOW TO RECEIVE REIMBURSEMENT To obtain reimbursement from your dependent care account, you must complete a claim form and attach itemized receipts that include: Name of Dependent Receiving Care Dates of Service Name of Service Provider Social Security or Tax ID Number Canceled checks, bankcard receipts, credit card receipts and credit card statements are NOT acceptable forms of documentation. You are responsible for paying your provider directly. Eligible dependent care expenses are those expenses you must pay for the care of an eligible dependent so that you and your spouse can work. The care may be provided either in your home or at a licensed center outside of your home. If the care is provided in your home, then the service cannot be provided by a child of yours under age 19, by your spouse or by your dependents. If the care is provided outside of your home, the facility must be in compliance with all applicable state and local regulations. If dependent care is provided outside your home, your dependent must return to your home for at least eight hours each day. EXAMPLES OF ELIGIBLE EXPENSES The following table lists some of the eligible expenses as defined by IRS Code 213: Au Pair Baby Sitters Nursery School Day Camps Private Pre School Licensed Day Care Centers Nannies Sick Child Centers Before and After Care Day Care for an Elderly Dependent EXAMPLES OF INELIGIBLE EXPENSES Only those dependent care expenses that enable you and your spouse to work are eligible. Educational costs and weekend or evening-out babysitting do not qualify. Overnight camp expenses are also ineligible. You cannot be reimbursed for any dependent care expenses if your spouse does not work, unless your spouse is a full-time student or is disabled. Kindergarten expenses are ineligible as an expense if it is primarily educational, regardless if it is half or full day, private or public state mandated or voluntary. Transportation, books, clothing, food, entertainment and registration fees are ineligible if these expenses are billed separately. For a complete list of eligible expenses see IRS Publication 503 “Dependent Care Expenses.” HR Simplified, Inc www.hrsimplified.com 866-812-4812 952-544-2902 9 of 9 68 of 101 EXAMPLES OF INELIGIBLE EXPENSES Days you or your spouse do not work (although you may still have to pay the provider): Leave of Absence Vacation Baby Sitting for Social Events Care provided by children under 19 (or by anyone you claim as a dependent) First Grade and above Food Expenses (if separated from dependent care expense) Overnight Camps Registration Fees HR Simplified, Inc www.hrsimplified.com 866-812-4812 952-544-2902 10 of 10 69 of 101 DEPENDENT CARE REIMBURSEMENT… Which is Better for You? After tax or before tax? Let's look at an example using $360 monthly of reimbursable expenses both ways -with and without a Flexible Spending Account. Tax Savings Example $30,000 Income NO FSA FSA GROSS MONTHLY INCOME PRE-TAX DEPENDENT CARE $2,500 $0 $2,500 $416 TAXABLE INCOME FEDERAL TAX (15%) STATE TAX (5%) FICA TAX (7.65%) $2,500 $375 $125 $191 $2,084 $312 $104 $159 AFTER-TAX DEP. CARE $416 $0 MONTHLY SPENDABLE INCOME $1,393 Tax Savings $63.00 $21.00 $32.00 $1,509 FSA SAVINGS TOTAL: $116 PER MONTH $1,392 PER YEAR Tax Savings Example $60,000 Income NO FSA FSA GROSS MONTHLY INCOME PRE-TAX DEPENDENT CARE $5,000 $0 $5,000 $416 TAXABLE INCOME FEDERAL TAX (28%) STATE TAX (5%) FICA TAX (7.65%) $5,000 $1,400 $250 $383 $4,584 $1,283 $229 $350 AFTER-TAX DEP. CARE AFTER-TAX HEALTHCARE EXPENSES $0 $416 $0 $0 MONTHLY SPENDABLE INCOME $2,551 $2,722 FSA SAVINGS TOTAL HR Simplified, Inc www.hrsimplified.com 866-812-4812 952-544-2902 Tax Savings $117.00 $21.00 $33.00 $171 PER MONTH $2,052 PER YEAR 11 of 11 70 of 101 HOW TO SET UP YOUR DEPENDENT CARE REIMBURSEMENT ACCOUNT STEP ONE Carefully estimate your eligible dependent care expenses for the upcoming year. Then use the special Expense Estimation Worksheet on the following page to help you determine your total expenses for the year. The Dependent Care Account is a superior method in most situations with the exception of low-income employees. One big advantage with the Dependent Care Spending Account is that you realize the savings immediately rather than waiting until you file your tax return. STEP TWO Contact your employer to obtain an enrollment form, which instructs your company to set aside a certain amount of money for your expenses. This amount will be contributed on a pre-tax basis from each of your paychecks to your Dependent Care Spending Account. Remember the amount you select will be set aside before any federal, social security, or, in most cases, state taxes are calculated. Expense Estimation Worksheet This worksheet will help you determine your annual expenses for each reimbursement account. Remember to be conservative with your estimates because unused funds must be forfeited. Good planning and careful estimating is the best way to take full advantage of your FSA. HR Simplified, Inc www.hrsimplified.com 866-812-4812 952-544-2902 12 of 12 71 of 101 ESTIMATING YOUR QUALIFYING HEALTHCARE EXPENSES Healthcare deductibles Healthcare co-payments and coinsurance Prescription drugs Vision exams, glasses, contacts Dental/Orthodontia Routine exams, physicals and immunizations Counseling/Psychotherapy Expenses for disabled dependents Over the Counter Drugs Other allowable expenses TOTAL ESTIMATED HEALTHCARE EXPENSES FOR THE PLAN YEAR (Consult your plan) $_______________________ $_______________________ $_______________________ $_______________________ $_______________________ $_______________________ $_______________________ $__________________________ $__________________________ $__________________________ $__________________________ ESTIMATING YOUR DEPENDENT CARE EXPENSES Child daycare expenses Preschool expenses Summer day camp expenses Adult daycare expenses Other eligible expenses $_______________________ $_______________________ $_______________________ $_______________________ $_______________________ TOTAL ESTIMATED DEPENDENT CARE EXPENSES $_____________________ FOR THE PLAN YEAR (Max. $5,000/ Min. $120) ($2,500 maximum if married and filing separate tax returns) TOTAL ESTIMATED EXPENSES FOR PLAN YEAR $______________________ DIVIDED BY THE NUMBER OF PAY PERIODS ÷______________________ FSA DEDUCTION PER PAY PERIOD = $______________________ HR Simplified, Inc www.hrsimplified.com 866-812-4812 952-544-2902 13 of 13 72 of 101 Section 213 Eligible Expense List – Given to eligible employees prior to of during open enrollment. It is also part of our welcome package that we send out to all newly enrolled participants at the beginning of each plan year. This form can be customized to meet the needs of each plan. 73 of 101 Eligible Expense List for Your Flexible Spending Plan What Expenses Can Be Reimbursed Under a Health FSA? The following Table describes whether certain types of medical expenses qualify as reimbursable medical care under your Flexible Spending Plan. Caution Regarding Use of the Table: Confirming that an expense is for medical care under the Table does not mean that the expense is reimbursable. A health FSA can only reimburse expenses incurred for medical care under Code § 213 if other requirements in the Code including those for claims substantiation are also met. In addition, provisions specific to your employers’ Summary Plan Description will also determine if an expense is reimbursable. The statements under the second column are intended to briefly highlight the general principles. Final determination will occur at the time reimbursement is requested. Expense Is the Medical Care Expense Reimbursable? Acupuncture Administrative costs Adoption—medical expenses incurred before adoption is finalized. Air conditioner Yes, if it is to treat a medical condition. Generally no. These are not medical care. Yes, for medical expenses incurred before an adoption is finalized, if the child was a legal dependent when services were provided. Maybe. It must be primarily used by the sick person to treat a medical condition. If it is attached to the home (e.g. central air conditioning), only the amount spent that is more than the value added to the property can be reimbursed. Also, if others benefit from the air conditioning, only the sick person’s pro rata amount is reimbursable. Yes. But only if recommended by a physician to treat a specific medical condition such as a severe allergy. Yes. Amount paid for inpatient treatment, including meals and lodging, at a therapeutic center for alcohol addiction. Transportation expenses associated with attending meetings of an Alcoholics Anonymous group in the community would also be medical care if attending on a physician’s advice that membership is necessary to treat alcoholism. Generally no, if the product is one that would be owned even without allergies, such as a pillow or a vacuum. However, an air purifier or water filter necessary to treat a specific medical condition may be allowable. Air purifier Alcoholism treatment Allergy treatment products and household improvements to treat allergies (e.g., filters, pillows, special vacuums, etc.) Alternative healers, dietary substitutes and drugs and medicines Ambulance Artificial limb Artificial teeth Automobile modifications Baby-sitting and childcare Battery-powered toothbrush Birth control pills Birthing classes Blood pressure monitoring devices Blood sugar test kit Body Scan Braille books and magazines Breast pumps Breast reconstruction surgery Capital expenditures Cayenne Pepper Chelation therapy Childbirth classes Chinese herbal doctor & herbal treatments Chiropractors Maybe. Non-traditional healing treatments provided by professionals maybe eligible under certain circumstances, but the IRS looks at them very closely. The expenses must be legal. However, the expenses are not reimbursable if the remedy is a “food or substitute for food” that the person would normally consume to meet nutritional requirements. It now appears that drugs and medicines recommended by alternate healers can qualify as medical care. Yes. Yes Yes Yes, if for physically handicapped persons. No. Baby-sitting, childcare, and nursing services for a normal, healthy baby are not reimbursable. Maybe, but only if prescribed by a physician to treat a specific dental ailment. Yes. Health FSAs are permitted to reimburse medicines and drugs that meet the definition of medical care under Code 213(d), including medicines purchased over the counter as well as prescription drugs. See Lamaze. Yes. Yes. Items such as blood sugar test kits and test strips are diagnostic items and would be reimbursable. Yes Yes. Only amount paid by visually-impaired person, above the cost of regular printed material Generally no. Ordinarily not reimbursable if for convenience, scheduling, or other personal reasons. But if there is an underlying medical reason (for example the participant’s physician recommends a breast pump because the participant has a breast abscess). May need to provide physician letter of medical necessity. Yes. Amounts paid for breast reconstruction surgery following a mastectomy for cancer are reimbursable. Maybe. A capital expense may be reimbursed if its purpose is to provide medical care for the participant, spouse, or dependent. A capital expense for portable medical items is reimbursable if it is bought only for use of the sick person. Expenses for improvements or special equipment added to a home may also be reimbursed if the main purpose of the item is medical care. How much is reimbursable depends on the extent to which the expense permanently improves the property and whether others (besides the sick person) benefit. Yes, if used to primarily treat a specific medical condition. Yes, if used to treat a medical condition such as lead poising. See Lamaze. Maybe. Non-traditional healing treatments provided by professionals maybe eligible under certain circumstances, but the IRS looks at them very closely. The expenses must be legal. However, the expenses are not reimbursable if the remedy is a “food or substitute for food” that the person would normally consume to meet nutritional requirements. Yes. Questions? Please call HR Simplified at 866-812-4812, M-Th 7:00am to 7:00pm CT and Fridays 7:00am to 5:00pm CT 74atof 101 Or visit us online www.hrsimplified.com 1 of 8 v.2005.1 Christian Science practitioners Circumcision COBRA premiums Co-insurance amounts and deductibles Contact lenses and related materials and equipment Contraceptives Controlled substances Cosmetics Cosmetic procedures (including cosmetic surgery) Counseling Crutches Dancing lessons Deductibles Dental treatment Dependent care expenses Diagnostic services Diapers or diaper service Disabled Dependent Care Expenses DNA, collection and storage Drug addiction treatment Drug overdose, treatment of Drugs Dyslexia Ear Plugs Egg donor fees Eggs and embryos, storage fees Electrolysis or hair removal Elevator Exercise equipment or programs Eye examinations, eyeglasses and related equipment and material Fertility enhancement Fitness programs Flu shots Fluoridation device Foods Funeral expenses Maybe. Payment for prayers of authorized practitioners may be reimbursable in certain circumstances. Non-traditional healing treatments provided by practitioners may be eligible under certain circumstances, but the IRS looks at them very closely. The treatments must be legal. Yes. No. Yes, if underlying expense would be reimbursed if entirely paid by the individual. Yes. Amounts paid for lenses needed for medical reasons, as well as material and equipment needed for using lenses, such as saline solution and enzyme cleaner. Contact lens insurance would not be reimbursable. Yes. Health FSAs are permitted to reimburse medicines and drugs that meet the definition of medical care under Code 213(d), including medicines purchased over the counter as well as prescription drugs. No, if the substance violates federal law. This is true even if a state law allows use of the controlled substance with a physician’s prescription and the participant gets that prescription. No. Cosmetics such as face creams, deodorants, hand lotions, or any similar preparation used for ordinary cosmetic purposes are not reimbursable. No, except for amounts paid for surgery necessary to improve a deformity arising from congenital abnormality, personal injury from an accident or trauma, or a disfiguring disease. “Cosmetic surgery” means any procedure that is directed at improving the patient’s appearance and does not meaningfully promote the proper function of the body or prevent or treat illness or disease. May need to provide physician letter of medical necessity. Maybe. If it is marriage counseling, no. If it is for a medical reason, then yes. See Psychiatric care and Psychologist. Yes. Amount paid to rent or buy. Substantiation should include amount paid plus evidence of hospital or doctor office care. No, if prescribed by a physician for improvement of general health. Maybe, if prescribed by a physician for a specific medical condition (e.g., as part of rehabilitation program after surgery). See Co-insurance. Yes. Amount paid for treatment including fees for X-rays, fillings, braces, extractions, dentures, orthodontia, etc. The reimbursable amount is limited if the treatment includes pre-payment for services that haven’t been provided. No. Yes No, not unless amounts are paid to relieve the effects of a particular disease.” Consequently, adult diapers used to relieve incontinence should be reimbursable, as contrasted with diapers for newborn babies whose need for them simply evidences normal health. Although there may be personal element in the adult diaper expense, it would not have been incurred “but for” the medical condition Yes, if the expenses are for medical care of the disabled dependent. Note that some disabled dependent care expenses that qualify as medical expenses may also qualify as work-related expenses for purposes of taking a credit for dependent care (Code 21) or for reimbursement under a dependent care assistance program (DCAP). These expenses can be applied towards the dependent care credit, the DCAP or a medical deduction, but the same expenses cannot be applied for more than one claim. Generally no. However, temporary storage may be reimbursable under some circumstances, such as where the DNA is collected as part of the diagnosis, treatment or prevention of an existing or imminent medical condition. “Temporary” is not defined, however, one consideration might be whether it is within the same plan year. Yes. Amounts paid for an inpatient’s treatment at a therapeutic center for drug addiction are reimbursable. Yes, so long as the treatment qualifies as medical care. Yes, if legally procured and generally accepted as medicines and drugs. Health FSAs are permitted to reimburse medicines and drugs that meet the definition of medical care under Code 213(d), including medicines and drugs purchased over the counter as well as prescription drugs. See Language training. Yes, to the extent prescribed by a physician for a specific medical condition (e.g., ear tubes). Yes. Amounts paid for the egg donor fee, an agency fee, an egg donor’s medical and psychological testing, insurance for post-procedure donor medical and psychological assistance and the legal fees for preparation of the egg donor contract. Maybe, with respect to fees for temporary storage for immediate conception. Storage fees for undefined future conception probably aren’t considered medical care. “Temporary” is not defined; however, one consideration might be whether it is within the same plan year. Generally no. See Cosmetic procedures. Installing an elevator on the advice of a physician so that a participant or dependent of the participant with heart disease will not have to climb stairs may be reimbursable to the extent of the amount in excess of value enhancement to the property. Generally no, unless recommended by a physician to treat a specific medical condition. Yes. Amount paid for eyeglasses and lenses prescribed by a physician for medical reasons, and eye examinations. Materials and equipment needed for using the eyeglasses, such eye cleaner, should be reimbursable as well. Also see Contact lenses and related equipment and materials, and Sunglasses. Yes, to the extent procedures are intended to overcome an inability to have children. Examples are IVF (in vitro fertilization), including temporary storage of eggs or sperm, surgery, (including an operation to reverse prior surgery preventing someone from having children), shots, treatments, and GIFT (gamete intrafallopian transfer). Expenses paid to or for an in vitro surrogate may not be medical care unless the surrogate is a tax dependent. See Exercise equipment or programs. Yes. Immunizations to prevent disease should qualify, even though no medical condition has been diagnosed. Yes. For fluoridation services, amount should be limited to cost allocable to current plan year. See Special foods. No. These are not for medical care. Questions? Please call HR Simplified at 866-812-4812, M-Th 7:00am to 7:00pm CT and Fridays 7:00am to 5:00pm CT 75atof 101 Or visit us online www.hrsimplified.com 2 of 8 v.2005.1 Gambling problem, treatment for Genetic testing Glucose monitoring equipment Guide dog or other animal aide Hair removal and transplants Health club dues Health institute fees Hearing aids Herbs Holistic or natural healers, dietary substitutes and drugs and medicines. Home care Hormone replacement therapy (HRT) Hospital services Household help Illegal operations and treatments Immunizations Inclinator Infertility treatments Insulin Insurance premiums Laboratory fees Lactation consultant Lamaze classes Language training Laser or Lasik eye surgery Lead-based paint removal Learning disability Lifetime care-advance payments Lodging at a hospital or similar institution Lodging not at a hospital or similar institution Lodging of a companion Lodging while attending a medical conference Long-term care services Marijuana or other controlled substances Massage therapy Mastectomy-related special bras Maternity clothes Mattress Meals at a hospital or similar institution Meals not at a hospital or similar institution Maybe. See Alcoholism treatment. A gray area. To the extent it is done to determine possible defects (e.g., if mother is over age 35), it is probably reimbursable. But not reimbursable if it is done just to determine the sex of the fetus Yes. Items such as blood glucose meters and glucose test strips are diagnostic items and would be reimbursable. Yes, if the expense is for buying, training and caring for animals used by a vision-impaired or hearing-impaired person. See Cosmetic procedures. Generally no. However, fees paid for specific services at a health club (e.g. physical therapy) may be reimbursable if recommended by a medical practitioner and substantiated by his or her statement that treatment is necessary to alleviate a physical or mental defect or illness. Yes, if paid o the health institute for treatment recommended by a physician who makes a written statement that it is necessary to alleviate a physical or mental defect or illness. Yes. Amount paid for hearing aid and batteries for its operation. See Vitamins Maybe. Non-traditional healing treatments provided by professionals maybe eligible under certain circumstances, but the IRS looks at them very closely. The expenses must be legal. However, the expenses are not reimbursable if the remedy is a “food or substitute for food” that the person would normally consume to meet nutritional requirements. It now appears that drugs and medicines recommended by alternate healers can qualify as medical care. See Nursing Services. Yes, if legally procured and generally accepted as medicines or drugs. Health FSAs are permitted to reimburse medicines and drugs that meet the definition of medical care, including medicines purchased over the counter as well as prescription drugs. Yes. Expenses of inpatient care (plus meals and lodging) at a hospital or similar institution are reimbursable if the main reason for being there is to get medical care. No, except for certain expenses that may qualify as nursing services. See Nursing services. No, even if they are rendered or prescribed by a licensed medical practitioner. Yes. Even in the absence of a specific diagnosis immunizations to prevent disease should qualify. Yes, if it otherwise qualifies as medical care and is detachable from the property and purchased only for the use of a sick person. See Capital expenses. See Fertility enhancement. Yes. Equipment needed to inject the insulin, such as syringes or insulin pumps would also qualify as medical expense. No. Yes. Amounts paid for lab fees that are a part of medical care Maybe. If a woman is having lactation problems and cannot breastfeed her child, then the expense of a lactation consultant may be allowable. Some of it. Expenses may be reimbursable to the extent that instruction relates to birth and not child rearing. The fee will have to be apportioned to exclude instruction in topics such as newborn care. Also, amounts for the coach or significant other are not eligible. Yes, if for a child with dyslexia or a disabled child. Yes. See Radial keratotomy. Radial keratotomy is reimbursable. Amounts paid for radial keratotomy or other laser eye surgery are reimbursable if the procedures are done primarily to promote the correct function of the eye. Yes, for the cost of removing lead-based paints from surfaces in the home to prevent a child who has or has had lead poisoning from eating the paint. These surfaces must be in poor repair and within the child’s reach. The cost of repainting is not a medical expense. Yes. Amount paid to special school or specially-trained teacher, which is prescribed by physician, for a child who has severe learning disabilities caused by mental or physical impairments. No. This is part of a fee paid monthly or as a lump sum under an agreement with a retirement home. Sometimes. If the main reason is to receive medical care. Yes, up to $50 per night if these conditions are met: (1)the lodging is primarily for and essential to medical care; (2)the medical care is provided by a physician in a licensed hospital or medical care facility related to (or equivalent to) a licensed hospital; (3)the lodging isn’t lavish or extravagant; (4)there is no significant element of personal pleasure, recreation or vacation in the travel. Yes, if accompanying a patient for medical reasons and all of the conditions described above are also met. For example, if a parent is traveling with a sick child, up to $100 per night ($50 for each person) can be reimbursed. No. Generally not reimbursable under a health FSA. See Controlled substances. Generally no, unless recommended by physician to treat a specific injury or trauma. A letter from a medical practitioner evidencing that the individual has a health condition and that the message therapy is being used to treat the condition may be necessary. Generally no, unless physician prescribes for mental health treatment. The administrator should get a physician’s certification of medical need. See Reconstructive surgery following a mastectomy. No. Unlikely, unless use is almost exclusively to treat medical condition. The IRS will likely use a three-part test evaluating the (1) severity of condition; (2) uniqueness of mattress to treatment of condition (e.g., is it a special mattress or hospital bed or just a more expensive “extra-firm” mattress); and (3) lack of functionality as a general purpose furnishing. Yes, if the main reason for being there is to receive medical care. Probably not. The IRS has taken the position that expenses for meals and lodging while traveling to receive medical treatment aren’t medical care. Questions? Please call HR Simplified at 866-812-4812, M-Th 7:00am to 7:00pm CT and Fridays 7:00am to 5:00pm CT 76atof 101 Or visit us online www.hrsimplified.com 3 of 8 v.2005.1 Meals of a companion Meals while attending a medical conference Medic alert bracelet or necklace Medical conference admission and transportation to transportation to/from Medical information plan changes Medical monitoring and testing devices Medical records charges Medical services Medicines Mentally retarded, special home for Naturopathic healers, dietary substitutes and drugs and medicines. Nonprescription drugs and medicines Norplant insertion or removal Nursing home expenses Nursing services Nutritionist’s professional expenses Nutritional supplements Obstetrical expenses Occlusal guards to prevent teeth grinding Operations Optometrist Organ donors Orthodontia Osteopath Over-the-counter medicine (e.g., aspirin Calcium supplements, etc.) Ovulation monitor Oxygen Patterning exercises Personal use items Physical exams Physical therapy Pregnancy test—over-the-counter Prenatal Vitamins Pre-payment for services Prescription drugs Prescription drug discount programs Propecia Prothesis Psychiatric care Psychoanalysis Psychologist No, even if accompanying a patient for medical reasons. No. Yes, if recommended by a medical practitioner in connection with treating a medical condition. Yes. Amounts paid by an individual for expenses of admission and transportation to a medical conference relating to the chronic disease of the individual’s dependent are reimbursable, if primarily essential to the medical care of the dependent. Transportation expenses include transportation to the city where conference is held, plus local transportation to the conference. The cost of meals and lodging while attending the conference is not allowed. Yes, to cover the current year’s storage costs. Amounts paid to a plan that keeps medical information so that it can be retrieved from a computer data bank for medical care are reimbursable. Yes. Examples of such devices are blood pressure monitors, syringes, glucose kit, etc. Yes. An expample is the fee associated with transferring medical records to a new medical practitioner. Yes. Amounts paid for legal medical services prescribed by physicians. Yes, if legally procured and generally accepted as medicines and drugs. Health FSAs are permitted to reimburse medicines and drugs that meet the definition of medical care under Code 213(d), including medicines and drugs purchased over the counter as well as prescription drugs. Maybe.The cost of keeping a mentally retarded person in a special home (not the home of a relative) on the recommendation of a psychiatrist to help the person adjust from life in a mental hospital to community living may be reimbursable. Maybe. Non-traditional healing treatments provided by professionals maybe eligible under certain circumstances, but the IRS looks at them very closely. The expenses must be legal. However, the expenses are not reimbursable if the remedy is a “food or substitute for food” that the person would normally consume to meet nutritional requirements. It now appears that drugs and medicines recommended by alternate healers can qualify as medical care. See Over the Counter Lists. Yes. Sometimes. Expenses for medical care in a nursing home or home for the aged for the participant, the participant’s spouse or dependent, including meals and lodging, are reimbursable if the main reason for being there is to get medical care. If the main reason for being in the home is not to get medical care (e.g. for personal or family reasons), then the cost that is for medical care or nursing services may be reimbursable (but the cost of meals or lodging is not). Any expenses that are for qualified long-term care services cannot be reimbursed on a tax-free basis through a health FSA. Yes, including nurses’ board where paid by the participant. Amounts spent in wages and other nursing services. Services need not be performed by a nurse, so long as the services are of a kind generally performed by a nurse. Does not include nursing services for a healthy baby. Maybe, if the treatment relates to a specifically diagnosable medical condition. Probably not reimbursable if the expense is for general health. The cost of nutritional supplements, vitamins, herbal supplements and natural medicines are not reimbursable if they are merely beneficial for general health. They may be reimbursable if recommended by a medical practitioner for a specific medical condition. Yes. Yes. Yes. Amount paid for legal operations, but not for cosmetic surgery operations. See Cosmetic procedures. See Eye exams and eyeglasses. See Transplants. Generally yes, unless care is for cosmetic purposes. Yes. See Over the Counter Lists. Yes. Yes. Amount paid for oxygen and equipment for breathing problems caused by a medical condition. Yes. Amounts paid to an individual for giving patterning exercises to a mentally retarded child are reimbursable. Generally no, unless it is used primarily to prevent or alleviate a physical or mental defect or illness. See Cosmetics, Toiletries, and Capital expenditures. Generally yes, but not employment-related physicals. Generally yes, so long as required for a specific medical condition. Yes. See Vitamins. No Yes. See Drugs. Generally no. This is a program where an individual pays a fee to get a card that provides a 20% discount off all drugs. A filled prescription may itself be reimbursable. Generally no, if purchased for cosmetic purposes (e.g. to treat male pattern baldness) even if recommended by a medical practitioner. But may be reimbursable if for a specific medical condition that is not for cosmetic purposes or, if it is, that ameliorates a deformity arising from one specified events in the safe harbor from the cosmetic procedures exception from medical care. See Artificial limb. Yes. Amount includes cost of supporting mentally ill dependent at a special center that provides medical care. Yes, except amount paid as part of training to be psychoanalyst. Yes. Expenses for medical care. Questions? Please call HR Simplified at 866-812-4812, M-Th 7:00am to 7:00pm CT and Fridays 7:00am to 5:00pm CT 77atof 101 Or visit us online www.hrsimplified.com 4 of 8 v.2005.1 Radial keratotomy Reading glasses Recliner chair Reconstructive surgery following mastectomy Retin-A Rogaine Rubdowns Safety glasses Schools and education, special Screening tests Seeing-eye dog Shipping and handling fees Sick-child facility Sleep deprivation testing and treatment Smoking cessation program Special foods (e.g., gluten-free or salt- free diet) Sperm, storage fees Stem cell, harvesting and/or storage of Sterilization procedures Student health fee Sunglasses Sunglasses Clips Supplies to treat medical condition (e.g., bandages, gauze, batteries for hearing aids. Surgery Surrogate expenses Swimming lessons Tanning salons and equipment Taxes on medical services and products Teeth whitening Telephone for hearing-impaired persons Television for hearing-impaired persons Therapy Transplants Transportation to and from a medical conference Yes. Amounts paid for radial keratotomy or other laser eye surgery are reimbursable if the procedures are done primarily to promote the correct function of the eye. Corneal ring segments (removable plastic half-rings that correct vision) would appear to be reimbursable under this category. Yes, if they correct a defect. Generally no, unless use is almost exclusively to treat medical condition. The IRS will likely use a three-part test (similar to that applicable to mattresses and beds) evaluating the (1)severity of the condition; (2)uniqueness of item to treatment of condition; and (3)lack of functionality as general purpose chair. A gray area. The IRS has informally indicated that this would be considered cosmetic surgery.” However, with the passage of the Women’s Health and Cancer Rights Act, it is likely that reconstructive surgery would be viewed as surgery “necessary to ameliorate a personal injury. Generally no, if purchased for cosmetic purposes even if recommended by a physician. But may be reimbursable if prescribed by a physician for a specific medical condition (such as acne). Generally no. See Retin-A. Generally, no, unless a physician determines that these are necessary to treat a specific illness. Likely no, unless prescribed. See Eye examinations and Eyeglasses. Payments made to a special school for a mentally impaired or physically disabled person are reimbursable if the main reason for using the school is its resources for relieving the disability. Includes such items as teaching Braille to a vision- impaired child, teaching lip reading to a hearing-impaired child, or giving remedial language training to correct a condition caused by a birth defect. Meals, lodging and ordinary education supplied by the special school is only medical care if the child is at the school primarily for relieving the disability. If the child is at the school to benefit from the courses and disciplinary methods, the expenses won’t qualify. Yes, if the tests are used for medical diagnosis. (e.g. cholesterol screenings) See Guide dog. Yes, so long as the fees are paid to obtain an item for medical care and are not unreasonable. Probably not, unless primary purpose is for medical care. Probably yes, if under the care of a physician. Generally yes. Amounts paid for a stop-smoking program are reimbursable, as are amounts for prescribed drugs. Over the counter drugs and medicines used to stop smoking would also be reimbursable. Yes, if prescribed by a physician to treat a specific illness or ailment, to the extent the cost of amounts paid exceeds cost of commonly available versions of the same product. Maybe, with respect to fees for temporary storage for immediate conception. Storage fees for undefined future conception probably aren’t considered medical care. “Temporary” is not defined; however, one consideration might be whether it is within the same plan year. Perhaps, if there is a specific and imminent medical condition that the stem cells are intended to treat. For example, the cost of harvesting and storing stem cells because a newborn has a birth defect and the stem cells would be needed in the near future might be allowable. But collection and storage indefinitely, just in case an item might be needed is not medical care. Yes. Amount paid for a legal operation, including vasectomy. No. If the fee is simply the cost of belonging to the program, such fees aren’t reimbursable. Yes, if they are prescription sunglasses. Amount paid for eyeglasses and lenses needed for medical reasons, and eye examinations. Possibly for non-prescription sunglasses if recommended by physician to alleviate an eye condition. No, if they are not corrective. Yes. If supply is not a drug or biological, is incurred to treat a specific medical condition, and is not a personal comfort item. See Operations. Generally, no, even if they are for medical care of the surrogate or her unborn child. What is key is the relationship between the expenses and the procedure, which needs to be performed upon the participant or the participant’s spouse or dependent-typically neither the surrogate nor her unborn child will qualify. No, if recommended by a physician for improvement of health. Maybe, if prescribed by a physician for a specific medical condition. Generally no, if prescribed by a physician for general health. Possibly, if incurred to treat a specifically diagnosable condition (e.g., skin disorder), so long as there is no personal element (e.g., use by other family members). Generally yes, to the extent that a tax is imposed on reimbursable medical care or products. This includes local, sales, service and other taxes. Generally no, at least not if done for cosmetic purposes. But if tooth discoloration (rising to the level of deformity) was caused by disease, birth defect or injury, expenses for teeth whitening might be reimbursable. See Cosmetic surgery. Yes, for amounts paid for purchase and repair of special telephone equipment for hearing-impaired person. There is no published position on whether the cost of a wireless telephone for a deaf person is reimbursable. See Capital expenses. Yes. The cost of equipment that displays the audio part persons, such as the cost of an adapter that attaches to a regular set or the cost of a specially equipped television to the extent it exceeds the cost of a regular model is reimbursable. See Capital expenses. Yes, if provided for medical care (and not just for the general improvement of mental health, relief of stress or personal enjoyment). See also Patterning exercises, Psychoanalysis, Psychologist and Schools and education, special. Yes. Amounts paid for surgical, hospital, laboratory, and transportation expenses for organ donor. Yes. Amounts paid by an individual for expenses of admission and transportation to a medical conference relating to the chronic disease of the individual’s dependent are reimbursable, if primarily essential to the medical care of the dependent. Transportation expenses include transportation to the city where conference is held, plus local transportation to the conference. The cost of meals and lodging while attending the conference is not allowed. Questions? Please call HR Simplified at 866-812-4812, M-Th 7:00am to 7:00pm CT and Fridays 7:00am to 5:00pm CT 78atof 101 Or visit us online www.hrsimplified.com 5 of 8 v.2005.1 Transportation and related travel expenses for person receiving medical care Transportation of someone other than the person receiving medical care Treadmill Tuition for special needs program (e.g., reading program for dyslexia) Tuition including separate breakdown for medical expenses Umbilical cord, freezing and storing or Unusual and customary, charges in excess of Vaccines Varicose veins Vasectomy Viagra Vision correction procedures Vision discount programs Vitamins Weight-loss program and/or drugs prescribed to induce weight loss. Wheelchair Wigs X-ray fees YMCA day camp Yes, if the expenses are primarily for and essential to medical care. These include car expenses, bus, taxi, train, plane, ferry fares and ambulance services. Instead of actual car expenses, 12 cents a mile is reimbursable for use of car to obtain medical care. Parking fees and tolls can also be reimbursed. Yes, in some cases. Transportation expenses of the following persons may be reimbursed: (1) a parent who must go with a child who needs medical care; (2) a nurse or other person who can give injections, medications or other treatment required by a patient who is traveling to get medical care and is unable to travel alone; and (3) visits to see a mentally ill dependent, if recommended as part of a treatment. Generally no, unless recommended by a medical practitioner to treat a medical condition. For example, if the individual can establish that the reason for the treadmill is to treat a medical condition (such as obesity), and the expense would not have been incurred “but for” that medical condition, it might be reimbursable. Probably not, unless primary purpose is for medical care. See Learning disability and Schools and education, special. Yes. Charges for medical expenses that are separately broken down in a bill for tuition or a college or private school are reimbursable, if they are for specific medical services (and not for medical care generally). Perhaps, if there is a specific medical condition that the umbilical cord in intended to treat. Collection and storage indefinitely, just in case it is needed is not medical care. “Temporary” is not defined, however, one consideration might be whether it is within the same plan year. The cost of storing blood because a newborn has a birth defect and the cord blood would be needed in the near future might be allowable for reimbursement. Yes. Medical expenses in excess of an insurance plan’s usual, customary, and reasonable charges are reimbursable if the underlying expense would be reimbursable. Yes. See Immunizations. No, if the procedure is directed at improving the patient’s appearance and does not meaningfully promote the proper function of the body or prevent or treat illness or disease. May be reimbursable if the procedure promotes the proper function of the body or prevents or treats an illness or disease. See Cosmetic procedures. Yes. See Sterilization. Yes, to the extent prescribed by a physician to treat a medical condition. Yes, medical procedures that correct vision, including laser procedures such as LASIK and radial keratotomy are reimbursable. Generally no. May be allowed to extent actual medical treatment is received (e.g., medical exam). Maybe, if recommended by a medical practitioner to treat a specific medical condition but not if they are merely beneficial for general health. Yes, if the weight-loss program is recommended by a physician to treat an existing disease (such as obesity, heart disease or diabetes), and is not simply to improve general health, then the expenses are reimbursable. However, the costs of food associated with a weight loss program, (such as special weight watchers-type dinners) would not be, since they just meet normal nutritional needs. Yes. Amount paid for purchase as well as cost of operation and upkeep of a wheelchair if needed for the relief of sickness or disability. Maybe. The full cost of a wig purchased if prescribed by a physician for the mental health of a patient who has lost all of his or her hair from disease or treatment (e.g., chemotherapy or radiation). Yes. Amounts paid for X-rays received for medical reasons. Generally no. However, if it is a special program that is therapeutic and treats a specific disability, then the expense might be reimbursable. Over the Counter Medications The lists below are not intended to be exhaustive. Other drugs not listed may fall into one of the categories described below. Over the counter drugs and medicines cannot be “stockpiled” for use in a future plan year. Stockpiling is defined as purchasing amounts larger than can be consumed in the current plan year. A “reasonable amount” criteria will be applied. 1. Over the Counter Drugs Used Primarily for Medical Care Typically reimbursable with proper receipt. No recommendation from a health care provider is needed. Type of Drug Allergy Prevention & Treatment Antacids and Acid Reducers Anticandial Anthistamines Antidiarraheal and Laxatives Ant-fungal Anti-itch Lotions and Creams(e.g.,for athletes foot,jock itch,bug bites,poison ivy) Cold Sore/Fever Blister Cough Suppressants Decongestant/Nasal Decongestant and Cold Remedies Diaper Rash Ointments Eye Drops for Allergy/Cold Relief Hemorrhoid Treatments Examples Benadryl, Sudafed, Actifed, Chlora Trimaton, and Nasalcrom Gas-X, Maalox, Mylanta, Turns, AXID AR, Pepcid AC, Prilosec OTC, Tagament HB, and Zantac 75 Femstat 3, Gyne-Lotrimin, Mycelrx-7, Monistat 3,7, and Vagistat-1 Actidil Syrup and Capsules, Actifed, Allerest, Benadryl, Claritin, Chlor-Trimeton, Contac, Dimetane, Drixoral, Nyquil, Sudafed,Tavist-1, and Triaminic Ex-Lax, Pepto-Bismol, Immodium A.D. and Kaopectate Lamisil AT, Lotramin AF, and Micatin Bactine, Caldecort, Cortaid, Hydrocortisone, Lanacort, Calamine Lotion, Benadryl Cream, Caladryl, Cortaid, Lamisil AT, Lotramin AF, and Micatin Abreva Cream Robitussin, Vicks 44, Chloraseptic Advil Cold and Sinus, Afrin, Afrinol, Aleve Cold and Synus, Children’s Advil Cold, Duration, Dristan Long Lasting, Neo-Synephrine-12 Hour, Orrivin, Sudafed, Tavist-D, Tylenol Cold and Flu, Thera-flu, Alka Seltzer Cold and Flu, Nyquil, Actidil Syrup and Capsules, Actifed, Allerest, Benedryl, Claritin, Chlor-Trimeton, Contac, Dimetane. Balmax and Desitin Ocu Hist Preparation H, Hemorid, and Tronolane Questions? Please call HR Simplified at 866-812-4812, M-Th 7:00am to 7:00pm CT and Fridays 7:00am to 5:00pm CT 79atof 101 Or visit us online www.hrsimplified.com 6 of 8 v.2005.1 Internal Analgesic/antipyretic Menstrual Cycle Medications Migraine Motion Sickness Medication Nicotine Gum or Patches and Smoking Cessation Aids Pediculicide(head lice) Poison Ivy Protection Smoking Cessation Toothache and teething pain relievers Advil, Aleve, Children’s Motrin, Nuprin, Excedrin, Tylenol, Bayer Midol, Pamprin, and Premysyn PMS Advil Migraine Liqui-gels, Excedrin Migraine, Motrin Migraine Pain Dramamine and Marizine Nicorette, Nicotrol, and Nicodin Nix Ivory Block Commit, Nicoderm CQ, Nicorette, Nicotrol Orajel 2. Dual Purpose Over the Counter Drugs Reimbursable with Health Care Provider’s Note Listing Diagnosis of a Medical Condition and Recommendation of OTC Drug Anti-baldness/hair loss/hair replacement such as Rogaine, but only if to replace hair loss due to a medical condition and not for balding due to age. Medicated shampoo to treat a specific medical condition like psoriasis and only the amount in excess of the cost of normal shampoo. Many plan sponsors may exclude completely to avoid having to determine whether the cost of a medicated shampoo exceeds the cost of regular shampoo. Dental fluoride treatments, special mouthwashes, or treatments for gingivitis. Fiber supplements such as Benefiber and Metamucil. Glucosamine/chondrotin for arthritis or other medical condition (not reimbursable if taken for overall joint health). Herbal supplements used to treat a specific disease such as St. John’s Wort for depression. Nose strips for proper breathing or other medical conditions Retin-A and other acne medicines (not reimbursable if used for cosmetic purposes such as wrinkle reduction). Snoring cessation aids and medications such as Breathe Right Spray, Snorezz. Weight loss/dietary supplements must be for a specific medical condition such as obesity. 3. Over the Counter Drugs Primarily Not Reimbursable OTC Drugs or other products that are not for medical care. Deodorants Face creams, moisturizers, eye creams, and wrinkle reducers Hair removal treatments and waxes Mouth washes, antiseptics and oral anesthetics Teeth Whitening kits and powders Toothpaste Vitamins taken to improve overall-health What Expenses Can Be Reimbursed Under a Dependent Care Assistance program (DCAP)? The following Table describes whether certain types of dependent care assistance expenses qualify as employment-related expenses under Code § 21 and therefore would be eligible for the Dependent Care Credit. Caution Regarding Use of the Table: Confirming that an expense is employment-related expense under the Table does not mean that the expense is reimbursable. A DCAP can only reimburse expenses incurred for dependent care assistance under Code § 21 if other requirements in the Code (including those for claims substantiation) are also met. In addition, provisions specific to your employers’ Summary Plan Description will also determine if an expense is reimbursable. The statements under the second column are intended to briefly highlight the general principles. Final determination will occur at the time reimbursement is requested. Expense After-school care or extended day programs (supervised activities for children after the regular school program). Is the Expense Eligible to Be “Employment-Related” Yes. These programs are generally custodial in nature. Although children are supervised by qualified adults, the primary purpose of these programs is to care for children while parents are at work. Assisted Living. See Custodial or elder care expenses Au pair expenses. Yes, but not airfare and other fixed costs. Baby-sitter inside or outside participant’s household. Yes, unless the baby-sitter is a child of the employee (or spouse) under age 19, or is otherwise claimed as a dependent by the employee or spouse on the IRS Form 1040. Chauffeur. No. Child of participant, amounts paid to. No, unless child is age 19 or older and cannot be claimed as a dependent of the participant or participant s spouse Code § 129(c). Cook Generally, no. See Household services Questions? Please call HR Simplified at 866-812-4812, M-Th 7:00am to 7:00pm CT and Fridays 7:00am to 5:00pm CT 80atof 101 Or visit us online www.hrsimplified.com 7 of 8 v.2005.1 Custodial or elder care expense. Only if (a) such expenses are not attributable to medical services, and (b) the qualifying individual regularly spends at least eight hours each day in the taxpayer’s household. Dependent care center expenses. Yes Disabled spouse or tax dependent lives outside household. No. They must regularly spend at least eight hours per day in the employee’s household Educational expenses—first grade and above. No. Educational expenses for a child in first or higher grades are not considered expenses for care. Educational expenses—kindergarten. No. Such expenses are primarily educational in nature, regardless of half- or full-day, private or public school, state-mandated or voluntary. Educational expenses—pre- kindergarten nursery school. Yes if the primary purpose of the expense is to care for the child so that the parent can work. Most nursery schools, even Montessori, are custodial in nature. Elder care. See Custodial or elder care expenses FICA and FUTA taxes of day care provider. Yes. Food expenses. No, if charged separately from dependent care expense. May be eligible if inseparably part of dependent care charge. Gardener. No. Household services e.g., housekeeper, maid, cook. General1y no, except where attributable in part to child care. Housekeeper. Generally, no, except where attributable in part to child care. See Household services. Incidental expenses—e.g., extra charges for diaper changing, special activities, etc. No, if charged separately from dependent care expense. May be eligible if part of dependent care charge. Kindergarten. See Educational expenses—kindergarten. Long-term Care Expenses. See Custodial or elder care expenses. Note that long-term care insurance cannot be offered under a cafeteria plan. Looking for work—dependent care expenses incurred to enable employee to look for work. Yes. Maid. Generally, no. See Household services Nanny expenses. Yes, to the extent expense is attributable to dependent care expenses and expenses of household services attributable in part to care of qualifying individual. See Registration fees Nursery school. See Educational expenses—pre-kindergarten expenses/nursery school. Nursing home expenses. See Custodial or elder care expenses. Overnight camp expenses. No. Amounts paid for services outside the employee’s household at a camp where the qualifying individual stays overnight are not employment-related expenses. Registration fees for care. Probably not. Most registration fees do not go toward the care of a qualifying individual. For example, a registration fee to a nanny service would not be for the care of a child. However, if the fees are allocable to actual care—and not described as a materials or other fees—IRS officials have informally indicated that fees might be reimbursable. Relative of participant, expenses paid to—e.g., parent or grandparent of participant. Yes, unless relative is a tax dependent of the participant or child under age 19. Self-employment (expenses incurred in connection with). Yes. Sick employee (that is, care for a dependent while the sick employee stays home). No. However, IRS officials have informally indicated that the limitation applicable to a “sick” employee was intended to apply to long-term illness. Summer day-camp. Yes, to the extent attributable to care of dependent regardless of whether the program includes instruction for sports or other extracurricular activities. The primary purpose of the expense for summer day-camp should be custodial in nature and not educational. The IRS closely scrutinizes child care expenses for summer camps and similar recreational activities. Transportation expenses. No, if charged separately from dependent care expense. May be eligible if part of dependent care charge. The IRS closely scrutinizes child care expenses involving foreign travel. Unemployment—expenses incurred to enable employee to look for work. See Looking for work—expenses incurred to enable employee to look for work. Volunteer work—expenses incurred to enable employee to volunteer. No, if the volunteer work is unpaid or for nominal pay. Questions? Please call HR Simplified at 866-812-4812, M-Th 7:00am to 7:00pm CT and Fridays 7:00am to 5:00pm CT Or visit us online www.hrsimplified.com 81atof 101 8 of 8 v.2005.1 Sample employee debit card brochure 82 of 101 W hat is it about employee health-care programs that seems so complicated at first glance? Maybe it’s all those initials you need to understand even before you start. Like HMOs, PPOs, and yes, EXPERIENCE THE BENEFIT FSAs. It’s enough to make even the most dedicated employee throw up their hands in frustration. It’s time we dispelled all that. Because when it comes to FSAs, For more information, contact your HR Department the advantages can really work to your benefit. www.mbibenefits.com 83 of 101 Still unsure about FSAs? Let’s spell out the benefits for you. A n FSA can be used for uncovered health-care costs such as doctor copays, LASIK surgery, orthodontics, certain over-the-counter medicines, dependent care and transportation expenses. Let’s start with the definition taxed, your health-care purchase power is account. So it’s as convenient as using an of FSA. Quite simply, it substantially increased. Let’s say you’re in a 30% ordinary credit card. What’s more, the MBI is in dollars stands for Flexible Spending tax bracket. You can now use 30% more of your Benefits Card virtually and sense. Account, and it can be an own money to buy health-care services and eliminates the endless paper- Safety in A remarkable indispensable part of your products. Why should Uncle Sam benefit from work and reimbursement wait numbers. $20 billion is overall benefits program. your hard-earned income? time which used to make FSAs With over Stretch your so complex and cumbersome. one million money further. For optimal convenience, your cardholders Use your FSA benefits card offers 24/7 online and counting, FSA popularity put into FSA accounts annually by employees just like you. Here’s how it works. The MBI Difference. An FSA is an account your Of course, not all FSAs are employer sets up so you can created equal. Yours, for instance, pay for a variety of health- is accessed via the best thing to care needs like insurance happen to FSAs since FSAs – the copays, deductibles, even MBI Benefits CardTM. Created by some dental and vision-care costs. But here’s the best part. Your FSA is funded entirely by MBI, the industry leader in debit card technology, your benefits dollars to access so you can check your purchase account balance plus other vital clearly the Tylenol®and other information with a single click. smart choice. eligible OTC products that you use everyday. MBI is To learn more about the benefits of FSAs and the MBI Benefits Card, simply ask your pre-tax income. So you save money on card lets you pay for eligible health-care costs. That’s like found money to health-care expenses virtually you’ll discover that FSAs and the MBI Benefits spend on all those everyday items you and everywhere MasterCard3 and/or Visa3 are accepted. Card spell real savings from A to Z. your employer. Once you know the facts, your family need! The MBI Benefits Card makes using your FSA Another way to look at an FSA is this. Because dollars as simple as ABC. For starters, the card the money you put into your account isn’t deducts each payment directly from your FSA 84 of 101 The MasterCard3 Brand Mark is a registered trademark of MasterCard International Incorporated. Visa3 is a registered trademark of Visa USA. The smart choice is MBI. Sample Employer debit card brochure 85 of 101 A letter from the CEO ... As a former senior executive for one of America’s largest health plans, I remember when managed care was considered the radical alternative to traditional health insurance. Today, it is the primary vehicle for providing health coverage to millions of America’s employees and their families. Now we are witnessing another revolution, called consumer-driven health care, where more of the decision making is shifting from the employer to the employee. And, like managed care, the need to reduce health care costs – without compromising on quality – is the driving force for its emergence. MBI. Quite simply we’re the smartest choice. The federal government recognized this with its approval of vehicles like Flexible Spending Accounts and Health Savings Accounts. Savvy employers from America’s largest corporations are making these tools available to their employees as a way to save on health care. We at MBI are proud to play a role in helping employers and employees get the most out of these flexible spending accounts. MBI is a technology company whose software is helping administrators, employers, employees and health plans make access to these benefit accounts convenient, secure and in the not-too-distant future, totally paperless. MBI is the acknowledged leader in electronic benefit payment software, thanks in part to our ability to deliver solutions that have always been out in front of the changing health-care marketplace. While our MBI Benefits Card is the debit card of choice for employees at over 12,000 companies, it is the technology behind our card that makes the millions of transactions our cardholders make in pharmacies, at physicians’ and dentists’ offices, a positive, effortless experience. Robert L. Natt Chief Executive Officer (p) 888.852.6334 (f ) 781.895.4934 www.mbibenefits.com 86 of 101 A s an employer, you’re always looking for ways to enhance the benefits programs you offer employees. Which explains why FSAs (Flexible Spending Accounts), utilizing debit cards, have become so popular. But before you go with just any benefits card, we suggest you consider which card is the most effective, and backed by the company with the most experience. The smart choice is MBI. An FSA can be used for uncovered health-care costs such as doctor visit copays, LASIK surgery, orthodontics, certain over-the-counter medicines, dependent care & transportation expenses. “ We always promote the MBI As the market leader in benefits card set aside in an FSA can be used to cover By offering the MBI Benefits Card to your MBI’s innovative electronic payment technology, only MBI gives you the out-of-pocket health-care costs like doctor employees, more and more of them will find system can handle all your account needs. advantages of FSAs coupled with the visit copays, LASIK surgery, orthodontics out just how easy and attractive FSAs are. The MBI Benefits Card will allow you to features of the industry’s most advanced and certain over-the-counter medicines. consolidate your benefit programs and Benefits Card when benefits card. With the MBI Benefits explaining our CardTM, your employees can pay for Your employees simply eligible expenses everywhere MasterCard% present their MBI and/or Visa% are accepted, without the Benefits Card to their tedious paperwork and reimbursement doctor or other health- complexities of lesser solutions. The care provider and bottom line? Only MBI makes flexible MBI’s proprietary sub- benefits programs run so smoothly and stantiation technology cost-effectively. Which is why we lead the does everything else. market with 12,000 employer partners By swiping their card, and over one million cardholders to date. employees can avoid Staples’ goal to taking money out of make both Here’s how it all works. Instead of paying their pockets or filling customers’ uncovered health-care costs with money out cumbersome claim and associates’ they’ve already paid taxes on, employees forms and waiting for lives easier. designate pre-tax wages for their FSA to reimbursement. use for these expenses. The result: It’s like Employees can even getting a 30 percent discount* on out-of- keep track of their pocket health-care costs instead of using account balances day after-tax dollars for these purchases. Money or night on MBI’s cardholder website. flexible benefits program. It would be difficult to take away the card once employees start using it. Our employees love it. ” Louisa St. George Benefits Specialist Ann Taylor “ Staples is Not only does MBI help you increase provide access to Flexible Spending Accounts, employee satisfaction, it can deliver Health Savings Accounts, Dependent Care, big savings to your bottom line. or Transit Accounts, all on one card. enhance the array of benefits we offer our associates. The MBI Benefits ” Carla Leonardo Analyst, Benefit Strategy & Design Staples * Based on an employee tax bracket of 30% The MasterCard% Brand Mark is a registered trademark of MasterCard International Incorporated. Visa% is a registered trademark of Visa USA. Each pre-tax dollar that your employees In the nearly 10 years since MBI invented designate into an FSA translates to a the concept, the card has established an 7.65% savings in your FICA contributions. industry presence second to none, with Therefore, the more your employees 200 Third Party Administrator (TPA) contribute to their FSA and use the card, partners and over 12,000 employer groups. MBI are simply wonderful. Employees love a simple swipe and the eligible expenses are processed. Benefits Card is a great way to increase Now, with over 70 percent of the market, your FSA enrollment because employees MBI’s experience makes our Benefits Card will use it, like it, and spread the word the logical choice. The same is true when among their coworkers. In fact, many of it comes to HRAs, HSAs, dependent care our Fortune 500 clients have experienced plans and transportation/parking accounts. growth in FSA enrollment upwards It’s time your company experienced the of 75% and contribution increases benefits of MBI. of 50% after instituting the card. For more information, contact your administrator or call MBI at 888.852.6334 87 of 101 ” Diana L. Johnson Director of Benefits Affiliated Computer Services, Inc. the more you save. Offering the MBI Card embodies provided by the ease of use … always looking for ways to “ The services Sample Enrollment Form 88 of 101 Flexible Benefit Plan Enrollment/Change Form Plan Information Enrollment (Check one below) Open Enrollment New Hire Qualifying Event (Please explain below) __________________________________________ Enrolling for Plan Year: June 1, 2004 to May 31, 2005 Qualifying Event Change ONLY Increase payroll deduction amnt/List new amnt below. Decrease payroll deduction amnt/List new amnt below. Inactivate account/Date of last p/r deduct ________ YTD contributions as of last paycheck $_________ Employee Information (PLEASE PRINT CLEARLY) Name: Social Security Number: Mailing Address (Reimbursement checks mailed to this address; PLEASE PRINT CLEARLY): City: State: Zip Code: Gender: Male Female Marital Status: Married Area Code /Daytime Phone #: Important: Number of times you get paid per year: ( ) A) Every week (52) Single D) 2 times/month (26) Select the Options You Want: (Select one or more) Participation Health Care Reimbursement Account Includes all eligible health care expenses. Subject to annual maximum of $_______. Does not require participation in employer’s health insurance plan. Dependent Care Reimbursement Account Includes all eligible dependent care expenses. Subject to annual IRS maximum of $5,000 per Head of Household or married couple filing jointly. Payroll Deduction Amount Plan Year Amount $______ $______ $______ $______ Yes No Yes No Waiver of Pre-Tax Benefits Under The Flexible Benefits Plan I elect to waive all pre-tax benefits under the Flexible Benefits Plan, but understand that I may elect similar coverage(s) on an after-tax basis. Except for a Change in Status, I understand that I cannnot elect pre-tax benefits until the next Anniversary Date and any after-tax coverages shall be outside the Plan. Your (Employee) Signature X Date: Designation of Beneficiary: In the event of my death, my designated beneficiary may have certain obligations and responsibilities to file claims and seek payment of benefits under the terms of the plan. I therefore designate as my beneficiary under the plan: Name Relationship Address Date: Your (Employee) Signature X To Be Completed By Employer Only: (Please COMPLETE this section for correct processing of form.) New Hire/Qualifying Event ONLY Employee Location # (If applicable) __________ Date account is effective: ________________________ Date of first payroll deduction: ____________________ Comments: Total # of pay dates remaining in plan year: __________ Employer Signature X Date: 89 of 101 Sample Welcome Letter – Sent in the Welcome package to all enrolled participants at the beginning of each plan year. All Welcome Packages are customized to meet the needs of each client. 90 of 101 John Doe 10400 Yellow Circle Drive Minnetonka, MN 55343 Dear John, HR Simplified is pleased to be selected as the Flexible Spending Account Administrator for Musicland Group, Inc. for the 04/01/2005 thru 3/31/2006 Plan Year. To assist you in submitting claims this Flex Spending Kit includes the following: Direct Deposit Authorization Form Flex Claim Form List of Eligible Expenses Release of Information Authorization Form – You must complete and return this form if you want information provided to anyone other than the plan participant. For instance, if you want your spouse to be provided with any of your FSA information you must complete this form. Claim submission tips are listed on the back of your claim form, please take a few minutes to review them. Following these guidelines will ensure that your claims will be processed on a timely basis and not returned to you for further completion. A new claim form will be enclosed with each reimbursement check or notice of direct deposit you receive. Please note that the minimum check reimbursement amount issued is $25.00 and that claims will be paid on a weekly basis. All claims received in our office by Wednesday will be processed for payment on the following Monday. If you prefer to have your claim reimbursements deposited directly into a bank account, please fill out the Direct Deposit Authorization form and return it to HR Simplified. Since it takes 7-10 days to process this form, any claims submitted during this period will be reimbursed to you via check. Below is a summary of the accounts you have elected under your Employer's Section 125 Plan for the Plan Year beginning 04/01/2005 and ending 3/31/2006. If you do not agree with these elections, please contact us as soon as possible. Benefit Description Employee Deduction Amount Employee Deduction Frequency Annual Election FSA Medical 25.00 BI-WEEKLY 650.00 FSA Dependent Care 100.00 BI-WEEKLY 2600.00 For current information on your Flexible Spending Account, visit our website at www.mypretax.com. To access your personal data, enter your User Name: First Name, Last Name and the last four digits of your social security number (ex: John Doe 1234) and your Password: PDK47SL43, then click Submit Login. We will be sending you a $5 VISA gift card as a way to thank you for your participation in the FSA for the 20052006 plan year. It is being sent under separate cover and should arrive within 4 to 6 weeks. Feel free to contact us with any questions you may have. Our phone number is (763)746-7400 or (866)812-4812. Our fax number is (763)746-7439 or (877)591-4249. 91 of 101 Active Employee Report – This report is sent out as part of the monthly billing and reporting cycle. It is also available on our web site and is updated daily. 92 of 101 Active Employee Report Page: 1 12/01/2003 - 12/01/2003 HR SIMPLIFIED INC 435 FORD RD SUITE 320 MINNEAPOLIS, MN 55426 SSN Employment Status Employee Name Termination Date Division 123-45-6789 Doe, John Active N/A DEPT 200 111-11-1111 Hall, Rebecca Active N/A DEPT 100 999-99-9999 Hanson, Doug Active N/A DEPT 200 321-65-4987 Hernandez, Julio Active N/A DEPT 300 654-65-4654 Jameson, Nadia Active N/A DEPT 300 321-45-6789 Jones, Jim Active N/A DEPT 200 222-22-2222 Smith, Jim Active N/A DEPT 100 Total Count 7 93 of 101 Printed: 12/11/2003 15:33:37 Employee Account Balance Report – This report is sent out as part of the monthly billing and reporting cycle. It is also available on our web site and is updated daily. 94 of 101 Employee Account Balances HR SIMPLIFIED INC As of: 12/11/2003 Page: 1 From: 01/01/2003 To: 12/31/2003 SS# Annual Election Employee Name YTD Claims Employee Deposits Employer Deposits Claims Paid Available Credit Account Balance Benefit: Dependent Care 123-45-6789 999-99-9999 321-45-6789 John Doe Doug Hanson Jim Jones Count: 3 Dependent Care 5000.00 4996.32 1800.00 400.00 75.00 250.00 4583.48 4580.28 1650.00 0.00 0.00 0.00 400.00 75.00 150.00 4183.48 4505.28 1500.00 4183.48 4505.28 1500.00 11796.32 725.00 10813.76 0.00 625.00 10188.76 10188.76 1200.00 1200.00 1080.00 480.00 1200.00 0.00 550.00 80.00 0.00 65.00 1100.00 1100.00 990.00 440.00 1100.00 0.00 0.00 0.00 0.00 0.00 0.00 550.00 80.00 0.00 65.00 1200.00 650.00 1000.00 480.00 1135.00 1100.00 550.00 910.00 440.00 1035.00 5160.00 695.00 4730.00 0.00 695.00 4465.00 4035.00 16956.32 1420.00 15543.76 0.00 1320.00 14653.76 14223.76 Benefit: Medical Reimbursment Account 123-45-6789 111-11-1111 321-65-4987 654-65-4654 222-22-2222 John Doe Rebecca Hall Julio Hernandez Nadia Jameson Jim Smith Medical Reimbursment Account Count: 5 Employer Totals: 95 of 101 Printed: 12/11/2003 03:34:43 PM Employee Account Balances HR SIMPLIFIED INC As of: 12/11/2003 Page: 1 From: 01/01/2003 To: 12/31/2003 SS# Annual Election Employee Name YTD Claims Employee Deposits Employer Deposits Claims Paid Available Credit Account Balance Division: DEPT 100 Benefit: Medical Reimbursment Account 111-11-1111 222-22-2222 Rebecca Hall Jim Smith 1200.00 1200.00 550.00 65.00 1100.00 1100.00 0.00 0.00 550.00 65.00 650.00 1135.00 550.00 1035.00 2400.00 615.00 2200.00 0.00 615.00 1785.00 1585.00 2400.00 615.00 2200.00 0.00 615.00 1785.00 1585.00 5000.00 4996.32 1800.00 400.00 75.00 250.00 4583.48 4580.28 1650.00 0.00 0.00 0.00 400.00 75.00 150.00 4183.48 4505.28 1500.00 4183.48 4505.28 1500.00 11796.32 725.00 10813.76 0.00 625.00 10188.76 10188.76 John Doe 1200.00 0.00 1100.00 0.00 0.00 1200.00 1100.00 Medical Reimbursment Account Count: 1 1200.00 0.00 1100.00 0.00 0.00 1200.00 1100.00 12996.32 725.00 11913.76 0.00 625.00 11388.76 11288.76 1080.00 480.00 80.00 0.00 990.00 440.00 0.00 0.00 80.00 0.00 1000.00 480.00 910.00 440.00 1560.00 80.00 1430.00 0.00 80.00 1480.00 1350.00 1560.00 80.00 1430.00 0.00 80.00 1480.00 1350.00 Medical Reimbursment Account Count: 2 DEPT 100 Division Account Balances: Division: DEPT 200 Benefit: Dependent Care 123-45-6789 999-99-9999 321-45-6789 John Doe Doug Hanson Jim Jones Count: 3 Dependent Care Benefit: Medical Reimbursment Account 123-45-6789 DEPT 200 Division Account Balances: Division: DEPT 300 321-65-4987 654-65-4654 Julio Hernandez Nadia Jameson Count: 2 DEPT 300 Division Account Balances: 96 of 101 Printed: 12/11/2003 03:36:04 PM Employee Account Balances HR SIMPLIFIED INC As of: 12/11/2003 Page: 2 From: 01/01/2003 To: 12/31/2003 SS# Employee Name Employer Totals: Annual Election YTD Claims 16956.32 1420.00 Employee Deposits 15543.76 Employer Deposits 0.00 Claims Paid Available Credit Account Balance 1320.00 14653.76 14223.76 97 of 101 Printed: 12/11/2003 03:36:04 PM Sample Explanation of Benefits and Payment Check – This EOB is sent out after for each processed claim. Participants who elect ACH will still receive this EOB. 98 of 101 HR SIMPLIFIED INC PAY TO THE ORDER OF 000009 Testing EXCEL BANK EDINA, MN 55410 CBA FOR: HR SIMPLIFIED INC 435 FORD ROAD, SUITE 320 MINNEAPOLIS, MN 55426 75-1489/910 08/16/2004 DATE JOHN DOE $********75.00 AMOUNT Seventy Five Dollars and 00/100 Cents JOHN DOE 435 FORD ROAD MINNEAPOLIS, MN 55426 VOID AFTER 180 DAYS C000009C A091014898A 20ˆ4370‡C 000009 EXPLANATION OF FLEXIBLE SPENDING BENEFITS HR SIMPLIFIED INC Claim Number 434033 John Doe Date of Service Benefit Description 07/15/2004 MED REIM Crystal Clinic Claim Amount Employee Totals: YEAR-TO-DATE STATUS Benefit Description Annual Election Claims Submitted Claims Paid Medical Reimbursment Account 1200.00 125.00 125.00 Prior Payments Check Amount 75.00 0.00 75.00 75.00 0.00 75.00 Contributed To Date 750.00 Account Balance Available Credit 625.00 1075.00 99visit of 101 If you have any questions, please call 866-812-4812 or our web site at www.mypretax.com Sample Close To The Year End Warning Letter – This letter is sent out typically in the 10th month of the plan year and will alert each participant of their account balance. 100 of 101 August 16, 2004 John Doe 435 Ford Road Minneapolis, MN 55426 HR SIMPLIFIED INC Plan Year: 01/01/2004 - 12/31/2004 It is a good idea to review the status of your Flexible Benefit Accounts as the plan year end approaches. As you know, any funds left in your account at the end of the plan year will be forfeited. You will have 90 days after the plan year ends to submit claims for expenses incurred during the plan year. If you terminated during the plan year, expenses must have been incurred while you were an active participant. Following is the status of your flexible spending account(s) as of the date of this letter: Current Annual Election MEDICAL REIMBURSMENT ACCOUNT 1200.00 Total Claims Submitted Total Claims Paid 125.00 125.00 Total Deduction Withheld Less Paid Claims Employee Balance 750.00 125.00 625.00 Current Annual Election Less Total Claims Submitted Remaining Credit for Year 1200.00 125.00 1075.00 If you have any questions, do not hesitate to contact us at (866) 812-4812 or (952) 544-2902. HR Simplified, Inc. Flexible Spending Department 101 of 101