FLEXIBLE BENEFIT PLAN SUMMARY

Transcription

1 FLEXIBLE BENEFIT PLAN SUMMARY EMPLOYER: Eden II School for Autistic Children, Inc. PLAN NAME: Eden II School for Autistic Children, Inc. Cafeteria Plan PLAN YEAR: January 1, 2017 to December 31, 2017 ELIGIBLE EMPLOYEES: All Employees Eligible For The Group Medical Plan ENTRY DATE: First day of the Plan Year Following The Date Eligibility is Met LIMITS: Health Care Flexible Spending Account: Under One Year of Employment $ 0 More Than One Year But Less Than Two Years of Employment $ 500 More Than Two Years Of Employment $2,600 Dependent Care Flexible Spending Account: $ 5,000 per year if you and your spouse file a joint tax return, or; $ 2,500 per year if you and your spouse file a separate tax return (not to exceed your taxable income or your spouse's earned income) This package is only an abbreviated summary of the major plan benefits. Please refer to plan documentation for details. 1

2 To: From: M E M O R A N D U M All Eligible Employees Joanne Miller, Manager, Flexible Benefit Plans HUB International, N.E. Date: November 2016 Re: Eden II School for Autistic Children, Inc. Cafeteria Plan In their continuing effort to provide their employees with superior benefits, Eden II School for Autistic Children, Inc. is pleased to offer you the opportunity to enroll in the Flexible Spending Accounts for This Plan enables you to set aside money on a pre-tax basis for certain benefits, thereby saving the Federal, State, City and FICA (Social Security) taxes on all contributions. The Flexible Spending Plan options are as follows: Health Care Flexible Spending Account (FSA) This portion of the Flex Plan allows you to set aside a certain amount of your salary (up to the maximum amount of $500 if employed more than one year, but less than two years or up to $2,600 if employed more than two years) on a pre-tax basis to cover certain eligible health care expenses which are not reimbursed to you through any group benefit plan. This would include deductibles, co-insurance and co-payment amounts and items not covered under the group medical plan. Attached is a detailed list of expenses which would be eligible under this plan. Dependent Care Flexible Spending Account (FSA) This part of the Flex Plan allows you to set aside a certain amount of your salary on a pre-tax basis to cover certain day care expenses for your children so that both you and your spouse can work. This plan can also be used to cover expenses for a parent who requires day care so that both you and your spouse can work, providing your parent is your dependent. The maximum allowable contribution under a Dependent Care FSA is $5,000 per year if you and your spouse file a joint tax return, or $2,500 per year if you file separate returns (not to exceed the taxable income of the employee or their spouse, whichever is lower). These limits are set by the Internal Revenue Service under IRC Section 129. When completing your Election Form, it is important to note that there is a use it or lose it rule, which means whatever monies you do not use and claim prior to the end of the grace period, you will lose. Therefore, we recommend that you be conservative in your election. Regardless this is an excellent vehicle to save tax dollars! In order to receive the benefits of this Plan, please complete the Election Form in this package and return to Human Resources as soon as possible. If you have any questions, please feel free to call me at or Phyllis Stearns at You can also me at Joanne.Miller@hubinternational.com 2

3 Examples of how the Flexible Spending Plan can save you money: Example #1 An employee earns $1,000 bi-weekly and estimates annual out-of-pocket medical expenses of $650 equals $25 per paycheck. Without Plan With Plan Gross Bi-Weekly $ 1, $ 1, Flex Spending Plan Contribution Adjusted Gross $ 1, $ Federal 15% State* 6% FICA 7.65% Net $ $ Less Out-of-pocket Medical Net Take-Home $ $ Estimated Bi-Weekly Savings to Employee: $ 7.16 Estimated Annual Savings to Employee: $ Example #2 An employee earns $1,500 bi-weekly and estimates annual out-of-pocket medical expenses of $1,500 which equals $57.70 per paycheck and dependent child care expenses of $2,500 which equals $96.15 per paycheck. Without Plan With Plan Gross Bi-Weekly $ 1, $ 1, Flexible Spending Plan (Medical) Flex Spending Plan (Dep. Care) Adjusted Gross $ 1, $ 1, Federal 15% State* 6% FICA 7.65% Net $ 1, $ Less Out-of-pocket Medical Less Out-of-pocket Dep. Care Net Take-Home $ $ Estimated Bi-Weekly Savings to Employee: $ Estimated Annual Savings to Employee: $1, This report is for illustrative purposes only. Savings will vary depending upon individual tax bracket. *New Jersey State income tax is not exempt under this plan. All other applicable income taxes are exempt. Pennsylvania State Income tax is not exempt on dependent child care plans. All other applicable income taxes are exempt. 3

4 Use this list of eligible expenses to help Determine elections for your Flexible Spending Account Examples of eligible Health Care FSA Expenses DENTAL SERVICES Crowns/Bridges Dental X-Rays Dentures Exams/Teeth Cleanings Extractions Fillings Gum Treatments Oral Surgery Orthodontia/Braces INSURANCE RELATED ITEMS Co-payments Co-insurance Deductibles LAB EXAMS/TESTS Blood Tests Cardiographs Diagnostic Fees Laboratory Fees Spinal Fluid Tests Urine/Stool Analyses MEDICATION Insulin Prescribed Birth Control Prescribed Vitamins Prescription Drugs **OVER-THE-COUNTER MEDICINE** Effective January 1, 2011 Over-the-counter medicines or drugs must be for a specific medical condition. They will not be reimbursed without a doctor s prescription: The items in this list are reimburseable, however, they require a doctor s prescription: Allergy Medicines Antihistamines Analgesics Antacids Anti-Diarrhea Medications Anti-Itch Medications Anti-Nausea Medications Aspirin Athletes Foot Creams and Powders Cold Sore Remedies Cough Syrups/Cough Drops Decongestants Eye Drops Fever Reducers First Aid Creams (Bactine, special diaper rash ointments, calamine lotion, bug bite medication, wart remover treatments) Digestive Tract Relief Medications Hemorrhoidal Medications Laxatives Lice and Scabies Treatments Menstrual Cycle Products (for pain and cramp relief) Motion Sickness Pills Nasal Sinus Sprays Nicotine Gum/Patches Pedialyte Sleeping Aids Smoking Cessation Products Special Ointments/Cream for Sunburns Vapor Rubs Weight Loss Drugs (to treat a specific disease) Yeast Infection Treatments Items not considered drugs, medicines or biologicals would still be eligible without a prescription, including, but not limited to the following: Bandages, band aids, gauze pads Blood pressure monitors Carpal tunnel wrist supports Contact lens solution Reading glasses Crutches Insulin and diabetes testing equipment OTHER MEDICALTREATMENTS/ PROCEDURES Acupuncture Alcoholism(inpatient treatment) Chiropractor Services Drug Addiction (inpatient treatment) Hearing Exams Hospital Services Infertility In-vitro Fertilization Norplant Insertion or Removal Patterning Exercises Physical Examination (not employment related) Physical Therapy Speech Therapy Sterilization Vaccinations and Immunizations Vasectomy and Vasectomy Reversals Well Baby Care OTHER MEDICAL SUPPLIES AND SERVICES Abdominal/Back Supports Ambulance Services Arches/Orthopedic Shoes Breast pumps and supplies Contraceptives Counseling (except for Marriage and Family) Crutches Guide Dog (for visually/hearing impaired person) Hearing Aids & Batteries Hospital Bed 4

5 Examples of eligible Health Care FSA Expenses Page Two OTHER MEDICAL SUPPLIES AND SERVICES Learning Disability (special school/teacher) Lead Paint Removal (if not capital expense and incurred for a child poisoned) Medic Alert Bracelet or Necklace Medical Miles, Tolls and Parking Oxygen Equipment Prosthesis Splints/Casts Support Hose (if medically necessary) Syringes Transportation Expenses (essential to medical care) Wheelchair Wigs (hair loss due to disease) VISION EXPENSES Contact Lenses Contact Lens Solution Eye Examinations Eyeglasses Laser Eye Surgeries Prescription Sunglasses Radial Keratotomy/LASIK This list is not meant to be all inclusive. Other expenses not listed may also qualify. Please refer to Section 213 of the Internal Revenue Code or call Hub International s customer service line Examples of ineligible Health Care FSA Expenses: Baby-Sitting Breast Pumps Canceled Appointment Fees Chapstick Contact Lens Insurance Cosmetics Cosmetic Surgery/Procedures Dancing/Exercise/Fitness Programs Diaper Service Electrolysis Eyeglass Insurance Face Cream Feminine Hygiene Products Hair Loss Medications Hair Transplant Health Club Dues Illegal Operation or Treatments Insurance Premiums Long Term Care Premiums Marriage or Family Counseling Massage Therapy* Maternity Clothes Meals that are not part of inpatient care Moisturizers Nutritional Supplements Personal Trainer Prescription Drug Discount Programs Prescription Drugs for Hair Loss Provider Discounts Rogaine Shampoos/Soaps Special Foods Suntan Lotion Supplements* (for general health) Teeth Whitening/Bleaching Toiletries Toothbrushes (including battery operated) Toothpaste Vision Discount Program Premiums Vitamins (for general health) Weight Loss Programs* (for general health) *If certain services or products are medically necessary, they may be covered by the Health Care FSA if prescribed by a physician for a specific medical condition. The prescription should contain the specific medical condition and timeframe for treatment. This list is not meant to be all inclusive. 5

6 FLEXIBLE SPENDING ACCOUNT PARTICIPANT WORKSHEET COMMON UNREIMBURSED MEDICAL EXPENSES EXAMPLE ACTUAL EXPENSES INCURRED 2016 ANNUAL EXPENSES ANTICIPATED 2017 Deductibles: $ Coinsurance: Prescriptions: HMO Copayments: Dental: Deductible Orthodontia 1, Oral Surgery 0.00 Vision: Exams Eyeglasses Contact Lenses 0.00 Preventive Services: Annual Physical Pediatrician 0.00 Ob/Gyn Services 0.00 Chiropractic: 0.00 Other Out Of Pocket Expenses: Total Out Of Pocket Expenses: $ 2, Note: The above example represents the amounts submitted for reimbursement after participant's reimbursement from his or her medical, dental and vision care plans. You and your eligible dependents may still receive reimbursements for expenses incurred even if you or they are not participating in any health, dental or vision plan. 6

7 FLEXIBLE SPENDING PLAN CLAIM FORM Send Forms To: HUB International, N.E Veterans Memorial Highway, Suite 210N, Hauppauge, NY Attn. J. Miller *Please call Joanne Miller at or Phyllis Cox at with questions* Or you can fax your claim to or Employer: Eden II School for Autistic Children, Inc. Name: ` Social Security #: Address: Telephone #: Address: Unreimbursed Medical Expense Claims Date Expense Incurred Name of Service Provider Expense Description Person For Whom Expense Was Incurred Net Amount ATTACH REQUIRED DOCUMENTATION Total Medical Care Expense Claim Dependent Care Expense Claims Name of Dependent(s) Period From Covered To Name, Address and Taxpayer ID # of Provider of Service Amount Incurred ATTACH REQUIRED DOCUMENTATION *Total Dependent Care Expense Claim *Dependent Care Note: The total amount claimed under the Plan for any coverage period must not exceed the lesser of your earned income for the plan year or the earned income of your spouse. (if your spouse is either a full-time student or is incapable of taking care of himself or herself, then he or she is deemed to have monthly earnings of $200 if there is (1) child or dependent, and $400 if there are two (2) or more.) No payment may be made under the Plan if the service provider is your dependent for federal income tax purposes, or is your child or stepchild and is under age 19. READ CAREFULLY The undersigned participant in the Plan certifies that all expenses for which reimbursement or payment is claimed by submission of this form were incurred during a period while the undersigned was covered under the Company s Cafeteria Plan with respect to such expenses and that the medical expenses have not been reimbursed or are not reimbursable under any other health plan coverage. The undersigned fully understands that he or she alone is fully responsible for the sufficiency, accuracy, and veracity of all information relating to the claim which is provided by the undersigned, and that unless an expense for which payment or reimbursement is claimed is a proper expense under the Plan, the undersigned may be liable for payment of all related taxes including federal, state, FICA (Social Security) or city income tax on amounts paid from the Plan which relate to such expense. Employee s Signature Date 7

8 FLEXIBLE SPENDING ACCOUNTS (FSA) Q: WHAT IS AN FSA? QUESTION AND ANSWER FOR: EDEN II SCHOOL FOR AUTISTIC CHILDREN, INC. CAFETERIA PLAN A: An FSA is an account whereby an employee may elect to set aside a portion of his/her salary on a pre-tax basis and be reimbursed for qualified unreimbursed medical expenses. Q: WILL I EARN INTEREST ON THE MONEY THAT I CONTRIBUTE TO THE FLEXIBLE SPENDING ACCOUNTS? A: Flexible spending accounts are not interest bearing investments. The advantage to flexible spending accounts is that you can pay your eligible health care and dependent care expenses with pre-tax dollars. Q: ARE THERE ANY STATES AND LOCAL GOVERNMENTS THAT DO NOT RECOGNIZE BEFORE-TAX CONTRIBUTIONS? A: The State of New Jersey does not permit any pre-tax contributions under IRC Section 125. The State of Pennsylvania permits pre-tax contributions for items of a medical nature, such as premiums and medical flexible spending accounts, however does not permit pre-tax contributions for dependent care expenses. Q: WILL I BE ABLE TO SUBMIT EXPENSES I HAD PRIOR TO MY PARTICIPATION IN THE FLEXIBLE SPENDING ACCOUNTS? A: No, only those expenses incurred during the period of coverage will be considered. Therefore, only incurred expenses after January 1, 2017 are eligible for reimbursement. Q: WHAT HAPPENS TO FORFEITED MONEY UNDER THE FLEXIBLE SPENDING ACCOUNTS? A: All deferrals must be used by the end of the plan year. Any unused deferrals will be forfeited. Forfeited money is pooled and used to help pay the administrative costs of the accounts. This complies with the IRS "use it or lose it" rule. Q: MY SPOUSE AND I ARE BOTH EMPLOYEES OF EDEN II SCHOOL FOR AUTISTIC CHILDREN, INC., CAN WE BOTH ENROLL IN THE FLEXIBLE SPENDING ACCOUNTS? A: Yes. You may both enroll on an individual basis. You may each contribute up to $500 if employed over one year but less than two years, or $2,600 if employed over two years in the Health Care Account and you are limited to $5,000 on a combined basis for Dependent Care Account contributions. The same rule applies to an employee whose spouse has a similar account (which may be called a "Reimbursement Account" or "FSA") at another company. Q: WHEN CAN I EXPECT TO SEE THE EFFECT IN MY PAYCHECK? A: Beginning with your second paycheck in January

9 Q: WILL I BE REQUIRED TO RE-ENROLL EVERY YEAR? A: Yes. Enrollments are effective only for one plan year. However, election forms are simplified for easy completion. Q: IF I INCUR AN EXPENSE THIS YEAR BUT DON'T PAY THE BILL UNTIL NEXT YEAR, DO I CLAIM THE EXPENSE UNDER NEXT YEAR'S FLEXIBLE SPENDING ACCOUNT? A: IRS regulations require that you claim the expense against the plan year it was incurred. You will also be permitted an additional grace period of 75 days to incur expenses. You will have until March 15, 2018 to incur expenses, you will then have a run out period to March 31, 2018 to submit claims for expenses incurred from January 1, 2017 through March 15, Q: WILL THE FLEXIBLE SPENDING ACCOUNTS AFFECT MY FUTURE SOCIAL SECURITY BENEFITS? A: Your Social Security benefits may be affected if your earnings are below the Social Security wage base ($127,200 in 2016). If your earnings are over the Social Security wage base and your contributions do not drop it below the wage base, you are not affected. In most cases, the tax advantages of the flexible spending accounts outweigh the impact on your Social Security benefits. Q: WILL A CLAIM FORM BE REQUIRED FOR FILING MY HEALTH CARE ACCOUNT EXPENSES? A: You will be required to complete the Health Care Account claim form and send it along with the Explanation of Benefits and receipts of your paid expenses. Q: WHERE CAN I GET THE APPROPRIATE CLAIM FORMS? A: Human Resources will have the necessary claim forms. Q: WHO WILL I SEND MY CLAIMS TO FOR PAYMENT? A: Claims administration will be done by HUB International, N.E., 1393 Veterans Memorial Highway, Suite 210N, Hauppauge, NY 11788, (631) or (631) All claims and inquiries should be directed to the attention of Joanne Miller or Phyllis Stearns. Q: IS THERE A MINIMUM CLAIM AMOUNT UNDER THE FLEXIBLE SPENDING ACCOUNTS? A: No, all claims will be paid in approximately 14 days. Q: WHAT HAPPENS WHEN I SUBMIT A CLAIM AND MY HEALTH CARE ACCOUNT BALANCE IS LESS THAN THE AMOUNT OF THE CLAIM? A: For claims against your Health Care Account, you will be reimbursed up to the annual amount you have elected, even if the amount has not yet accumulated in your account. Q: CAN I USE THIS ACCOUNT TO PAY FOR MY SPOUSE'S DEDUCTIBLE AND CO-PAYMENTS? A: Yes. However, you cannot use this account to pay your spouse's insurance premiums through another employer other than Eden II School for Autistic Children, Inc. 9

10 Q: WHAT EXPENSES ARE CONSIDERED QUALIFYING UNREIMBURSED MEDICAL EXPENSES? A: See separate list attached in this package. Q: MAY I CLAIM A TAX DEDUCTION ON MY FEDERAL INCOME TAX RETURN FOR THE MONEY I CONTRIBUTE TO THE HEALTH CARE ACCOUNT? A: Since you are not taxed on the money you contribute to the account, you may not claim any tax deduction for those same expenses on your Federal Income Taxes. The only health care expenses eligible for a tax deduction are any additional eligible medical expenses that exceed 7.5% of your adjusted gross income. Q: CAN I ENROLL IN THE FSA ACCOUNT IF I DON'T HAVE MEDICAL COVERAGE? A: Yes, you can. Medical coverage is not a prerequisite for enrolling in a Health Care Account and Dependent Care Account. Q: CAN I ENROLL IN THE DEPENDENT CARE ACCOUNT IF MY SPOUSE WORKS PART TIME? A: Yes, as long as your contribution to the account does not exceed your spouse's earned income. Q: MAY I USE THE DEPENDENT CARE ACCOUNT TO PAY A CARETAKER FOR MY ELDERLY MOTHER SO THAT I CAN WORK? A: If your mother lives with you and relies on you for at least 50% of her support, the Dependent Care Account can be used for her day care expenses. However, the care must be day care expenses incurred because you work, not custodial nursing care. Also, if you are married, the care must be necessary because your spouse also works or is a full-time student. Q: WHAT IF MY DAY CARE PROVIDER DOES NOT WANT TO GIVE ME HIS OR HER SOCIAL SECURITY NUMBER? CAN I STILL USE THE DEPENDENT CARE ACCOUNT? A: No. IRS restrictions require you to provide the Social Security number of the individual caretaker or the taxpayer identification number of a child care or adult care center. Without this information, you cannot receive reimbursement from the Dependent Care Account. Q: BOTH MY SPOUSE AND I WORK, BUT MY SPOUSE MAKES ONLY $4,000 A YEAR. DOES THIS AFFECT HOW MUCH WE CAN CONTRIBUTE TO THE DEPENDENT CARE ACCOUNT? A: Yes it does, because you cannot contribute more than your or your spouse's taxable income, whichever is lower. In your case, your contribution could not exceed $4,000 for that plan year. Q: ARE DAY CARE CENTER EXPENSES ELIGIBLE FOR REIMBURSEMENT FROM THE DEPENDENT CARE ACCOUNT? A: Yes, if the day care center has more than six children or adults enrolled and is licensed. 10

11 Q: IF THE CHILD OR ELDER CARE SERVICES ARE PROVIDED IN MY HOME BY AN AU PAIR OR NANNY, WILL THE EXPENSES BE REIMBURSABLE UNDER THE DEPENDENT CARE ACCOUNT? A: Yes. The services may be provided inside or outside your home. You just need to provide the taxpayer identification number and incurred expense receipt from the caretaker in order to be reimbursed. The caretaker cannot be one of your dependents or one of your children under age 19. Q: ARE BEFORE-SCHOOL AND AFTER-SCHOOL EXPENSES ELIGIBLE UNDER THE DEPENDENT CARE ACCOUNT? WHAT ABOUT SUMMER CAMP OR KINDERGARTEN? A: Yes. In situations where a child under age 13 receives before-school or after-school care at the school, the employee must separate the total cost of caring for the child (before and after-school care) from the cost of schooling. If this cost is not available separately, it will be prorated based on the number of hours. Summer day camp is reimbursable if it allows you or you and your spouse to work. Kindergarten, however, is not considered an eligible expense. Q: CAN I BE REIMBURSED FOR DAY CARE EXPENSES THAT I HAVE PAID IN ADVANCE? A: No, you can only be reimbursed after the service has actually been rendered. Q: I AM A VOLUNTEER AT A HOSPITAL. MAY I USE THE DEPENDENT CARE ACCOUNT FOR REIMBURSEMENT OF DEPENDENT CARE EXPENSES INCURRED SO I CAN VOLUNTEER? A: No. The Dependent Care Account can only be used for dependent care expenses incurred so that you or, if you are married, you and your spouse can work. Q: IS MY CHILD'S SCHOOL TUITION AN ELIGIBLE EXPENSE UNDER THE DEPENDENT CARE ACCOUNT? A: Only nursery school tuition or non-tuition costs associated with a dependent child's nursery-type facility, operated by a community group or the like, is eligible for reimbursement under the Dependent Care Account. Q: CAN I USE THE DEPENDENT CARE ACCOUNT TO PAY CHILD SUPPORT? A: No. According to IRS rules, this account is to pay for the care of your children that are living with you and only when paying for such care enables you, (and not your ex-spouse), to work or go to school full time. Q: IF MY DEPENDENT'S 13TH BIRTHDAY IS THIS YEAR, MAY I USE THE DEPENDENT CARE ACCOUNT FOR REIMBURSEMENT OF EXPENSES FOR THE ENTIRE YEAR? A: Only expenses incurred before your dependent reaches age 13 are eligible for reimbursement. So, if your child's birthday is February 1st, you may use your account for reimbursement of day care expenses through January 31st. 11

12 Q: WHAT HAPPENS WHEN I SUBMIT A CLAIM AND MY DEPENDENT CARE ACCOUNT BALANCE IS LESS THAN THE AMOUNT OF THE CLAIM? A: You may be reimbursed from your Dependent Care Account only up to the amount that you have contributed. If your claim is for a greater amount, it will be paid gradually as you contribute more money. It will not be necessary to resubmit the claim. Q: WHAT HAPPENS IF I TERMINATE EMPLOYMENT? A: If you terminate employment you will have 60 days to submit claims for reimbursement of expenses incurred prior to your termination. Expenses incurred after you terminate are not eligible for reimbursement. Q: ONCE THE ELECTION IS MADE FOR THESE PLANS, CAN THE PARTICIPANT CHANGE HIS MIND DURING THE YEAR? A: The elections, once made, are irrevocable for that plan year. New elections are made prior to the beginning of each subsequent plan year. However, certain situations, known as changes in family status can arise during the plan year; such events allow the participant to change an election. These situations include: Marriage of the participant Divorce of the participant Death of a spouse or child of the participant Birth or adoption of a child (pregnancy does not constitute a change in family status) Termination of a spouse's employment Employment of the spouse You or your spouse taking an unpaid leave of absence Switching from part-time to full-time employment by participant or spouse, or vice versa A significant change in my family's health coverage attributable to my spouse's employment Q: WHAT DO I HAVE TO DO TO ENROLL? A: On the attached Election Form, complete your name, address, Social Security number. If you wish to participate in the Health Care and/or Dependent Care FSA, check off and indicate on the blank line the amount you wish to contribute for the plan year of 1/1/17 through 12/31/17. This Q and A, as well as the other hand out pages do not constitute a Summary Plan Description. Please refer to plan documentation for details. 12

13 CAFETERIA PLAN Election Form and Compensation Reduction Agreement Employer Name: Eden II School for Autistic Children, Inc. Employee Name: Employee Address: Employee Social Security Number: Plan Year January 1, 2017 through December 31, 2017 The Company and I hereby agree that my cash compensation will be reduced by the amounts set forth below for each pay period during the plan year (or during such portion of the year as remains after the date of this agreement). Election and Compensation Reduction Agreement for Coverage Under Certain Benefit Plans ANNUAL CONTRIBUTION Health Care Flexible Spending Account $ Dependent Care Flexible Spending Account $ I do not wish to participate. OTHER TERMS AND CONDITIONS I understand that: If my required contribution for the elected benefits are increased or decreased while this agreement remains in effect, my compensation reduction will automatically be adjusted to reflect that increase or decrease. Prior to the first day of each plan year I will be offered the opportunity to change my benefit election for the following plan year. If I do not complete and return a new election form at that time, I will be treated as having elected to continue by benefit coverage then in effect for the new plan year for insurance benefits. However, if I fail to complete a new election form I will be treated as having elected not to participate in the flexible spending accounts. In addition, this compensation reduction agreement will continue by its terms in the amount of the required contribution for the benefit option. Election Of Medical Reimbursements And Compensation Reduction Agreement I elect to receive medical reimbursements for the plan year. Amount of compensation reduction: $ per pay period which is a total of $ for the plan year. The plan limit is $500 if employed over one year but less than two years, or $2,600 if employed over two years for the plan year. I understand that: Reimbursements will be available for "qualifying medical care expenses" as described below. I agree to notify the Company if I have reason to believe that any expense for which I have obtained reimbursement is not a qualifying expense. I also agree to indemnify and reimburse the Company on demand for any liability it may incur for failure to withhold federal, state, or local income tax or Social Security tax from any reimbursement I receive of a non-qualifying expense, up to the amount of additional tax actually owed by me. This agreement will automatically terminate if the Plan is terminated or discontinued, or if I cease to receive compensation from the Company which, before reduction hereunder, is at least equal to the amount of that reduction. Qualifying Medical Care Expenses Under the Plan, you will be reimbursed only for those types of medical expenses normally deductible on your federal income tax return with certain exceptions (i.e., health insurance provided by a spouse's employer cannot be reimbursed). 13

14 Election Of Dependent Care Assistance And Compensation Reduction Agreement I elect to receive dependent care assistance for the plan year. Amount of compensation reduction: $ per each pay period which is a total of $ for the plan year. This amount cannot exceed the limitation in paragraph 8 below. I understand that: Reimbursements will be available only for "qualifying dependent care expenses" as described below. I agree to notify the Company if I have reason to believe that any expense for which I have obtained reimbursement is not a qualifying expense. I also agree to indemnify and reimburse the Company on demand for any liability it may incur for failure to withhold federal, state, or local income tax or Social Security tax from any reimbursement I receive of a nonqualifying expense, up to the amount of additional tax actually owed by me. This agreement will automatically terminate if the Plan is terminated or discontinued, or if I cease to receive compensation which, before reduction hereunder, is at least equal to twice the amount of that reduction. I agree to provide the Plan Administrator with the name, address, and if applicable, the taxpayer identification number of the service provider. Qualifying Dependent Care Expenses 1. The expenses are incurred for services rendered after the date of this election and during the plan year to which it applies. 2. Each individual for whom you incur the expense is (A) A dependent under age 13 whom you are entitled to claim as a dependent* on your federal income tax return, or (B) A spouse or other tax dependent* who is physically or mentally incapable of caring for himself or herself. * Or a child or other dependent under age 13 whom you are supporting but are not entitled to claim as a dependent only because of a written declaration or decree of divorce. 3. The expenses are incurred for the care of a dependent described above, or for related household services, and are incurred to enable you to be gainfully employed. 4. If the expenses are incurred for services outside your household, they are incurred for the care of a dependent who is described in 2(A) above, or who regularly spends at least 8 hours a day in your household. 5. If the expenses are incurred for services provided by a dependent care center (i.e., a facility that provides care for more than six individuals not residing at the facility), the center complies with all applicable state and local laws and regulations. 6. The expenses are not paid or payable to a child of yours who is under age 19 at the end of the year in which the expenses are incurred. 7. The expenses are not paid or payable to an individual for whom you or your spouse is entitled to a personal tax exemption as a dependent. 8. The reimbursement (when aggregated with all other reimbursements received by you under the Plan during the same year) may not exceed the least of the following limits: (A) The maximum allowed under the Plan. (B) $5,000 (if you are filing a joint return) and $2,500 if separate returns are filed. (C) Your taxable compensation (after all compensation reduction elections). (D) If you are married, your spouse's actual or deemed earned income Other Terms And Conditions I understand that: I cannot change or revoke this compensation reduction agreement at any time during the plan year unless I have a change in family status (including marriage, divorce, death of a spouse or child, birth or adoption of a child, termination or commencement of employment of a spouse, or such other events as the Plan Administrator determines will permit a change or revocation of any election). The Plan Administrator may reduce or cancel my compensation reduction or otherwise modify this agreement in the event he believes it advisable in order to satisfy certain provisions of the Internal Revenue Code. The reduction in my cash compensation under this agreement shall be in addition to any reductions under other agreements or benefit plans. The amount of my compensation reduction during the year will be credited to an insurance, medical reimbursement, and/or dependent care assistance account and such amount will be paid on my behalf or I will be reimbursed for the qualified expenses incurred during the year. My Social Security benefits may be slightly reduced as a result of my election. I hereby authorize the Company to withhold a service fee of $ N/A per pay period from my compensation for administrative costs of the Plan. THIS AGREEMENT IS SUBJECT TO THE TERMS OF THE COMPANY'S CAFETERIA PLAN, MEDICAL REIMBURSEMENT PLAN, AND/OR DEPENDENT CARE ASSISTANCE PLAN AS AMENDED FROM TIME TO TIME IN EFFECT, SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH APPLICABLE LAWS, SHALL TAKE EFFECT AS A SEALED INSTRUMENT UNDER APPLICABLE LAWS AND REVOKES ANY PRIOR ELECTION AND COMPENSATION REDUCTION AGREEMENT RELATING TO SUCH PLAN(S). Employee's Signature Date: Accepted and Agreed to by the Employer: By: Date: 14