Flexible Spending Account. National Benefit Services

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1 National Benefit Services 61

2 What is a Flexible Spending Account? A Flexible Spending Account (FSA or Cafeteria Plan), allows employees to use tax-free funds to pay for Day Care expenses and eligible Medical/Dental/Vision expenses not covered by insurance. WGU has adopted a plan under section 125 of the IRS code that allows employees to set aside pre-tax money each pay period into an FSA. WGU s FSA plan is administered by National Benefit Services. FSA Enrollment Options Health Care Expense Account This health care expense account allows employees to save money by paying out-of-pocket healthrelated expenses with pre-tax dollars. Funds are available from day one of effect. Limited-purpose Health FSA A limited-purpose health flexible spending account (referred to as a limited-purpose FSA) is much like a typical, general-purpose health FSA; however, under a limited-purpose FSA, eligible expenses are limited to qualifying dental and vision expenses. Per the IRS regulations, this option allows employees to remain eligible to participate in both a limited purpose FSA and HSA. Dependent Care Account (Day Care Expenses) This option allows employees to use pre-tax dollars to pay for dependent-care expenses incurred while working. The dependent care is not pre-funded - this reimbursement is available to participants, once a claim has been incurred and money has been deducted from their pay check. How a Flexible Spending Account Works 1. Designate an annual election of pre-tax dollars into a health and/or dependent care spending account, during WGU s FSA open enrollment. IRS annual limits for contributions are as follows: Health Care Spending Account - $2500 per year Dependent Care Spending Account - $5000 per year, or $2500 if married and filing separately. 2. Pay for eligible healthcare services or dependent care services using several reimbursement options (see below). NBS FSA Debit card use your card when making healthcare-related purchases, such as prescriptions and eye glasses. It s like a debit card just swipe and go. Manual Claim Submit a claim (via web, fax, , or post office); arrange for FSA funds to be deposited directly to your checking or savings (continual reimbursement). Dependent - care expenses can only be reimbursed through claim submissions or continual reimbursement. Remember to keep your receipts for claims submissions. Grace Period vs. Rollover In October 2013, the IRS announced a modification to the use-or-lose rule for health FSA s. This modification permits plan sponsors to allow up to $ unused FSA money to be rolled over in the next plan year. WGU has adopted this provision for 2014 and forward. The rollover provision will replace the FSA grace period which permits a participant to have period of extra time to use FSA funds after the close of a plan year. The grace period will still apply to 2013 funds. 62

3 2015 FSA Grace period schedule: Deadline to incur claims against 2014 FSA funds - March 15, 2016 Deadline to submit 2014 manual claim - March 30, 2016 Enrollment Requirements Current plan participants: Plan year runs from calendar year to calendar year. You must re-enroll in the plan every new calendar year in order to continue your participation. WGU s FSA Open Enrollment is held during the month of December each year, with the benefit going into effect January 1st, of the following year. New hires who wish to enroll in an FSA must do so within 30 days from eligibility date. Participation becomes effective the first day of the month following date of hire. Current WGU employees experiencing a qualifying life event may enroll or make changes to an existing FSA within 30 days from the date of the qualifying event. The benefit will be effective on the date of the event. Dependent care elections changes can be made in the event that child care needs change. To make a status change to your FSA, please contact benefits@wgu.edu. NBS Contact information: Customer Service: Phone: (800) service@nbsbenefits.com To submit a manual claim: Fax: (800) (toll free); claims@nbsbenefits.com Claim forms can be downloaded from NBS s website: FSA Debit cards: Cards are good for 4 years - once you are enrolled in the FSA plan, funds will be reloaded each year you re-enroll until the expiration date; the debit card company will automatically send a new card to your home approximately one month before the expiration date. Lost cards can be replaced by contacting service@nbsbenefits.com. 63

4 What is the difference between an HSA and an FSA? Health Savings Account (HSA) Flexible Spending Account (FSA) Account definitions Who can open the account? Who can contribute? Who owns the account? Is there an annual contribution limit? Do unused funds carry over to the next year? Can you take the account funds with you if you change jobs, change health plans, or retire? Can you use the account for retirement income? Is the account tax advantaged? Can the account earn interest? Will the account reduce health insurance premiums? Can the account reduce the outof-pocket health care expenses of the account holder? Can the account reduce the outof-pocket health care expenses of the account holder? A tax-advantaged account used to pay for qualified medical expenses of the account holder, spouse, and/or dependents. The employee or employer as long as the employee is enrolled in an HSAeligible health plan. Employers, employee/account holder, or any third party. The employee/account holder. In 2014, the annual contribution limits are $3,300 for individuals and $6,550 for families. In 2015, limits are $3,350 and $6,650, respectively. An employer-established, taxadvantaged account funded by the employee to pay for qualified medical expenses with pre-tax dollars. The employer. The employee. The employee, but any account balances over $ revert back to the employer at the end of the plan year. Yes, as determined by the employer's plan design. Balances under $ Yes, after age 65, you can withdraw funds for any reason with no penalty. Although, if not used for qualified medical expenses, withdrawals will be taxed as income. Yes, account holders contribute taxfree, any interest or investment gains are tax-free, and when used for qualified expense, you withdrawals are always tax free. Yes, and after the account balance reaches a minimum balance requirement (typically $2,000), you can invest in Health Equity's investment funds and any gains are also tax-free. Yes, for both the account holder and the employer, if applicable. Yes, employee contributions are made through pre-tax payroll deductions. 64

5 CAFETERIA PLAN Western Governors University Western Governors University has established a "Cafeteria Plan" to help you pay for your out-ofpocket medical expenses. One of the most important features of our Plan is that the benefits being offered are generally ones that you are already paying for, but normally with money that has first been subject to income and Social Security taxes. Under our Plan, these same expenses will be paid for with a portion of your pay before Federal income or Social Security taxes are withheld. This means that you will pay less tax and have more money to spend and save. However, if you received a reimbursement for an expense under the Plan, you cannot claim a Federal income tax credit or deduction on your return. GENERAL PLAN INFORMATION Plan Name: Western Governors University Cafeteria Plan Address: South 700 East, Suite 700 Salt Lake City, UT Telephone:... (801) Tax I.D. Number: Plan Number: Plan Effective Date:... 1/1/2002 Amended:... 1/1/2014 Plan Year End:... December 31st Maximum Medical Limit:... $2,500 Maximum Dependent Care Limit:... $5,000 Health FSA Rollover Up to $500 following the Plan run-out Run-out Period: Days Plan Administrator: Western Governors University Company Contact:... Hailey Bray CONTRIBUTIONS Before each Plan Year begins, you will select the benefits you want and how much of the contributions should go toward each benefit. It is very important that you make these choices carefully based on what you expect to spend on each covered benefit or expense during the Plan Year. Generally, you cannot change the elections you have made after the beginning of the Plan Year. However, there are certain limited situations when you can change your elections if you have a change in status. Please refer to your Summary Plan Description for a change in status listing. ELIGIBILITY If you work 39 hours or more each week for the company, you will be eligible to join the Plan following your date of employment. You will enter the Plan on the first day of the month following your date of employment. BENEFITS Under our Plan, you can choose the following benefits. Health Flexible Spending Account: The Health Flexible Spending Account (FSA) enables you to pay for expenses allowed under Section 105 and 213(d) of the Internal Revenue Code which are not covered by our insured medical plan and save taxes at the same time. The most that you can contribute to your Health Flexible Spending Account each Plan Year is $2,500. Each Calendar year the amount may increase for cost of living adjustments. Please note: If you participate in a Health Savings Account (HSA) benefit you cannot participate in the Full Health Flexible Spending Account benefit, but you can participate in the Limited Health Flexible Spending Account Benefit. Health Savings Account Benefit: You may contribute to a Health Savings Account, which enables you to pay for expenses which are not covered by a Qualified High Deductible Health Insurance Plan and save taxes at the same time. If you participate in this benefit you cannot participate in the Health Flexible Spending Account benefit, only the Limited FSA. Limited Health Flexible Spending Account: If you participate in a Health Savings Account, the Health FSA allows you to be reimbursed by the Employer for out-of-pocket preventative care, dental and/or vision expenses incurred by you and your dependents. You may not, however, be reimbursed for the cost of other health care coverage maintained outside of the Plan, or for long-term care expenses. Dependent Care Flexible Spending Account: The Dependent Care Flexible Spending Account enables you to pay for out-of-pocket, work-related dependent day-care cost with pre-tax dollars. Please see Summary Plan Description for definition of eligible dependent. The law places limits on the amount of money that can be paid to you in a calendar year. Generally, your reimbursement may not exceed the lesser of: (a) $5,000 (if you are married filing a joint return or you are head of a household) or $2,500 (if you are married filing separate returns; (b) your taxable compensation; (c) your spouse s actual or deemed earned income. Also, in order to have the reimbursements made to you from this account be excludable from your income, you must provide a statement from the service provider including the name, address, and in most cases, the taxpayer identification number of the service provider on your tax form for the year, as well as the amount of such expense as proof that the expense has been incurred. Premium Expense Account: A Premium Expense Account allows you to use taxfree dollars to pay for certain premium expenses HIGHLIGHTS under various insurance programs that we offer you. Please note: Policies other than company sponsored policies (i.e. spouse's or dependents' individual policies etc.) may not be paid through the Cafeteria Plan. Furthermore, qualified long-term care insurance plans may not be paid through the Cafeteria Plan. BENEFITS PAYMENT During the course of the Plan Year, you may submit requests for reimbursement of expenses you have incurred. Expenses are considered incurred when the service is performed, not necessarily when it is paid for. You can get a claim form at for reimbursement. You must submit claims no later than 60 Days after the end of the Plan Year for the Health Flexible Spending Account and the Dependent Care Flexible Spending Account. However, if you have unused contributions in your Health Flexible Spending Account following the Plan run-out period, you may roll up to $500 to the new plan year. Any Dependent Care contributions remaining or any amount above $500 in your Health FSA at the end of the plan year will be forfeited. HIGHLY COMPENSATED & KEY EMPLOYEES Under the Internal Revenue Code, "highly compensated employees" and "key employees" generally are Participants who are officers, shareholders or highly paid. If you are within these categories, the amount of contributions and benefits for you may be limited so that the Plan as a whole does not unfairly favor those who are highly paid, their spouses or their dependents. Please refer to your Summary Plan Description for more information. You will be notified of these limitations if you are affected. FAMILY AND MEDICAL LEAVE ACT Notwithstanding anything in the Plan to the contrary, in the event any benefit under this Plan becomes subject to the requirements of the Family and Medical Leave Act of 1993 and regulations thereunder, this Plan shall be operated in accordance with proposed Regulation ADDITIONAL PLAN INFORMATION As a participant in the Plan, you are entitled to certain rights and protections under the Employee Retirements Income Security Act of 1974 (ERISA). Please refer to your Summary Plan Description for more information on your ERISA rights. Updated January 13, 2014 (801) Salt Lake City, UT 65