Cafeteria Plan. Explanation Booklet. For January 1, 2010 through December 31, 2010 Plan Year Elections

Transcription

1 Cafeteria Plan 2010 Explanatin Bklet Fr January 1, 2010 thrugh December 31, 2010 Plan Year Electins 1

2 Table f Cntents Cafeteria Plan Overview 3 Medical Plan Optins. 5 Dental Plan Overview. 7 Flexible Spending Accunt Overview Health Care Flexible Spending Accunt Dependent Care Flexible Spending Accunt.. 10 Cafeteria Plan Administratin Premium Cnversin Explanatin. 16 2

3 NORWICH UNIVERSITY CAFETERIA PLAN OVERVIEW Fr January 1, 2010 thrugh December 31, 2010 Plan Year The purpse f the Nrwich University Cafeteria Plan is t address each emplyee's unique benefit needs by letting them chse hw their benefit dllars shuld best be spent. Eligible emplyees are prvided a Mnthly Benefit Allwance (MBA) at the beginning f each plan year r when they cmmence emplyment, if later. The purpse f this bklet is t help yu make infrmed chices regarding hw t spend yur MBA. Eligibility and Effective Date f Cverage Emplyees regularly scheduled t wrk 20 r mre hurs per week n an annual basis are eligible t participate in the Plan. The effective date f their electins is the first f the mnth cincident with r next fllwing the date they cmmence emplyment with the University. Fr cntinuing emplyees wh cmplete the Online Electin and Enrllment Frm in Nvember / December, cverage is effective January 1st. Data The data used in preparing yur MBA is cntained in the Online Electin and Enrllment Frm. Please verify the accuracy f the infrmatin and immediately ntify Human Resurces f any errrs. Mnthly Benefit Allwance Frmula Yur persnal MBA will shw up autmatically when cmpleting yur nline enrllment. STEP 1 $300 x yur full time equivalency factr (see next page) + STEP 2 Cst f yur cre benefits = Yur MBA Basic Mnthly Earnings Basic Mnthly Earnings are simply yur Basic Annual Earnings divided by 12. Full-Time Emplyee Emplyees regularly scheduled t wrk 30 r mre hurs per week n an annual basis. Part-Time Emplyee Emplyees regularly scheduled t wrk less than 30 hurs per week n an annual basis. Fr part-time emplyees, the base allcatin f $300 is multiplied by a full-time equivalency factr (e.g., exempt - 25/40 r nn-exempt - 25/37.5) t arrive at yur MBA. The net result, fr example, is that an exempt emplyee wrking 20 hurs per week wuld get 50% f the base allcatin that a full-time exempt emplyee wuld receive. 3

4 MBA Philsphy The MBA has been calculated s that at a minimum, full-time emplyees have enugh mney t purchase the cre benefits, plus the HMO High Deductible Health Plan (HDHP) cverage (with the assistance f the Medical Allwance see belw), plus Dental cverage, plus have a few dllars per mnth left ver. Medical Allwance In additin t their MBA, each emplyee wh elects Medical/Hspital cverage will als be entitled t a Medical Allwance based n the cst f the HMO HDHP cverage. Yur persnal Medical Allwance will autmatically calculate when yu chse yur ptin and cverage categry nline. Part-time emplyees will receive a pr-rated Medical Allwance based upn their scheduled hurs per week and whether they are a salaried r hurly emplyee. Cre Benefits All eligible emplyees must participate in the University's Life, Accidental Death and Dismemberment, and Lng Term Disability insurance plans. In additin, hurly emplyees are als required t participate in the new Shrt Term Disability plan. This requirement is due t the underwriting rules f the insurance cmpanies. If yu wuld like the Lng r Shrt Term Disability premiums subtracted frm yur paycheck n an after-tax basis, please cntact Human Resurces. Disability benefits are taxable when the premium is paid by an emplyer. If the premium is paid n an after-tax basis, any benefits wuld nt be taxable. The mnthly cst f yur cre benefits, as well as the net MBA, autmatically calculates n yur Online Electin and Enrllment Frm. The net MBA balance is available t apply t the rest f yur benefit chices. Cash Optin Depending n yur electins, yu may still have mney left in yur MBA (this will be autmatically calculated) and can take the mney in cash, which will simultaneusly increase (within legal limits) yur pre-tax cntributin t yur tax-sheltered annuity (403(b)) accunt, it is fully taxable t yu and will shw up n the last line f yur nline enrllment frm. It will als shw up as a separate incme item in yur regular paycheck. The prtin f the MBA that yu elect t receive in cash will be allcated by the fllwing frmula: Nn-Exempt Emplyee MBA Cash x 12 = MBA Cash Paid Bi-Weekly 26 Exempt Emplyee MBA Cash x 12 = MBA Cash Paid Semi-Mnthly 24 Fr emplyees wh terminate emplyment, the MBA they elected t receive in cash shall cease with the pay date fr the pay perid in which they perfrm their last hur f service fr the University. 4

5 NORWICH UNIVERSITY MEDICAL PLAN Overview fr 2010 Emplyees cntinue t have the pprtunity t chse frm 3 cverage ptins. We encurage yu t review the Plan utlines and prvider infrmatin, n the Blue Crss website at 1. HMO - High Deductible Health Plan (HDHP) This ptin, called BlueCare, is prvided by Blue Crss Blue Shield (BCBS), and is cupled with a Health Savings Accunt (HSA). Single cverage has a $2,000 deductible and 2-persn r family cverage has a $4,000 deductible, which can be met by expenses fr ne persn r a cmbinatin. Generally, eligible expenses (including prescriptins) are paid at 100% nly after the deductible has been met, hwever, certain preventive services and eye exams are nt subject t the deductible. The Plan has an unlimited maximum lifetime benefit and includes dependent student cverage up t age 25. A primary care physician referral is nt required t see a specialist if using a BlueCare prvider. 2. Cmprehensive - High Deductible Health Plan (HDHP) This ptin, called Blue, is als prvided by BCBS and has deductibles f $2,250 fr single cverage and $4,500 fr tw-persn r family cverage. It is therwise similar t the HMO ptin except fr a brader netwrk, lifetime maximum f $2,000,000, and it des nt have a visin rider. The cst f this ptin is higher than BlueCare because f brader netwrk access, and emplyees are respnsible fr the difference in premium. Health Savings Accunt (HSA) An HSA is an accunt that yu can put mney int t save fr future medical expenses. There are certain tax advantages t having an HSA, and we encurage yu t learn mre by ging t the US Treasury Department s website (click n Health Savings Accunts ). Nrwich s HSA wrks in cnjunctin with either HDHP ptin, t prvide a way t pay fr the deductible and ther eligible expenses n a pre-tax basis. Fr 2010, Nrwich will fund $1,500 fr single and $3,000 fr 2-persn r family. The HSA payment schedule is as fllws: January 4, 2010 Five mnths cntributin ($625/$1,250) June 1, 2010 One mnth cntributin ($125/$250) July 1, 2010 One mnth cntributin ($125/$250) August 2, 2010 Balance five mnths cntributin ($625/$1,250) There may be individual instances where accelerated HSA depsits are warranted. If an emplyee with an HSA prvides evidence that the health plan deductible has been met befre the University has cmpleted the scheduled emplyer depsits t the accunt, the University will prvide an accelerated depsit f the remaining cntributins fr the plan year at the beginning f the next mnth. Yu have the pprtunity t fund the remaining balance f the deductible n a pre-tax basis plus an additinal amunt up t IRS limits (belw). These pretax cntributins will be spread evenly ver the year. Fr 2010, the maximum cntributin fr an eligible emplyee with self-nly cverage is $3,050. The maximum cntributin fr an eligible emplyee with 2-persn r family cverage is $6,150. If yu are at least 55 years ld, yu are allwed t cntribute additinal catch up payments t the HSA n a pre-tax basis up t $1,000 fr Please nte, if yu becme eligible after January 1st and yu d nt stay in the HSA fr 12 mnths fllwing the last mnth f the year f the first year f eligibility, the 5

6 amunt disallwed will be included in grss incme and subject t a 10% additinal tax. The mney depsited int yur HSA accunt is yurs t keep, if yu d nt use it t pay fr ut-fpcket medical expenses, even upn terminatin. Any unused dllars simply keep accumulating in yur accunt each year. Due t IRS rules, yu cannt have an HSA and be cvered under anther medical plan (with limited exceptins). This means it is unlikely that yu will be eligible t participate in anther health plan utside f Nrwich, if yu enrll in ne f the Nrwich medical plans. 3. N Cverage Eligible full-time regular emplyees will be allwed t chse this ptin nly if they can prve that they are cvered under anther health plan. Full-time emplyees d nt have t cver their dependent(s), if any. Eligible part-time regular emplyees will be allwed t chse this ptin and will nt be required t prve they are cvered under anther plan Mnthly Csts COVERAGE TIERS Single 2 - Persn Family HMO/HDHP $ $ $ Cmprehensive HDHP $ $ $1, Prescriptin Drugs Bth plans include prescriptin cverage. Present yur BCBS ID card at a participating ExpressScripts pharmacy, the prescriptin will be priced at the BCBS negtiated rates and yu pay fr it either ut f yur HSA r persnal funds. The cst is applied directly t yur deductible. Once yur deductible has been met, all eligible expenses including prescriptins are paid at 100%. Diabetic supplies are treated the same as any drug and, therefre, are subject t the deductible. If yu take daily medicatin, a mail rder prgram is available which allws yu t purchase up t a 90-day supply and the prescriptins are delivered t yur hme. Fr further infrmatin, call Express Scripts at (877) r lg n t COBRA Prices Nrwich University cntinues t assume certain risks and ther csts fr ur Medical/Hspital and Dental Plans. Therefre, the csts utlined in this packet are nt the COBRA rates. Emplyees and/r their dependent(s) wh wuld therwise lse their cverage can, in certain circumstances, chse t cntinue their cverage, prvided they pay the necessary premium. This premium is referred t as the COBRA rate, which will be higher than the prices quted in this packet. 6

7 NORWICH UNIVERSITY DENTAL PLAN Overview fr 2010 General Explanatin The Plan pays cvered services (see belw) at 80%. The maximum benefit per year is $750 per persn cvered. A family f fur wuld have a $3,000 annual maximum benefit limitatin. Additinal infrmatin can be fund in the Nrwich University Dental Plan Summary Plan Descriptin. Cvered Services The plan cvers the fllwing dental services: Office visits fr cleanings and x-rays Oral surgery Referrals t specialist Secnd and third surgical pinins Fluride applicatins Space maintainers Extractins Restrative services such as fillings Enddntics (rt canal) Peridntics (treatment f gum disease) Majr restrative wrk such as crwns, inlays and bridges Orthdntic prcedures (braces) While participatin in the Dental Plan is nt mandatry, if yu chse nt t participate and d nt have ther cverage, yur maximum benefit will be reduced if yu jin the plan in a future year. The reductin is 50% in the first year and 25% in the secnd year after a plan year in which yu had n dental cverage Mnthly Csts Dental Single 2-Persn Family Emplyee Cst Per Mnth $24.39 $48.77 $85.35 Once yu have selected yur cverage tier, the cst will autmatically be reflected n the nline enrllment frm. The mnthly premium fr the Dental ptin chsen will be paid by any ne r a cmbinatin f the fllwing methds: MBA Withheld frm yur paycheck n a pre-tax basis Withheld frm yur paycheck n an after-tax basis 7

8 NORWICH UNIVERSITY FLEXIBLE SPENDING ACCOUNTS Overview fr 2010 Vluntary Participatin Yu may vluntarily establish a Flexible Spending Accunt fr Health and/r Dependent Care expenses t pay fr thse expenses n a befre-tax basis. This will reduce yur taxable incme fr scial security/medicare, federal and state incme taxes. Cntributins Yu may cntribute salary deferrals as well as MBA mney t these accunts. Any MBA mney will be pr-rated and credited t yur accunt n the tw pay dates f each mnth if yu are an exempt emplyee and pr-rated and credited each bi-weekly pay date if yu are a nn-exempt emplyee. If yu terminate emplyment, any MBA mney that yu directed t yur accunt cease with the pay date fr the pay perid in which yu perfrm yur last hur f service fr the University. N interest is credited t yur accunt(s), and the same frfeiture, reimbursement, mid-year electin changes, and change in status rules apply t MBA mney and salary deferrals. Cntributins t the accunts will be available fr reimbursement f eligible expenses incurred during the January 1, 2010 thrugh December 31, 2010 Plan Year. Wh is Eligible? Emplyees eligible t participate in the medical plan are eligible t participate in ne r bth Flexible Spending Accunts. IMPORTANT: Due t HSA rules, if yu enrll in either medical plan yu can nly participate in the Health Flexible Spending Accunt n a limited basis, that is, yu are limited t nly dental and visin expense reimbursements frm yur accunt. What Abut Existing Electins? Yur electins fr the prir Plan Year (thse yu made in December 2008) will terminate December 31, Yu must make a new electin fr the January 1, 2010 thrugh December 31, 2010 Plan Year. What Abut Existing Accunt Balances? Yu have the pprtunity t submit claims fr dependent r health care expenses that were incurred during a calendar year (January 1 - December 31), until May 31 f the fllwing calendar year. After that, yu will frfeit any unused mnies. Frfeitures will first be used t pay any experience lsses f the plan and any remaining mnies will be cntributed t the Nrwich University Capital Campaign. Enrllment T participate in either Flexible Spending Accunt, r cntribute t yur HSA, yu must cmplete the Online Electin and Enrllment Frm during pen enrllment r within thirty (30) days f a qualifying change in status (refer t page 14). Please nte that yu can change yur HSA cntributins at any time, as the change in status rules d nt apply. 8

9 Health Care Flexible Spending Accunt The Plan permits yu t reduce yur salary by the amunt yu estimate will be required t cver eligible health care expenses (up t a maximum f $4,000) per Plan Year. The amunt by which yu reduce yur salary ges int yur accunt, and as yu incur health care expenses, yu draw reimbursements frm yur spending accunt. Yu cannt use the spending accunt fr any ther purpse. By reducing yur salary, yu lwer yur incme reprted fr federal, state and scial security/medicare taxes and therefre, cntributins t and benefits frm the Flexible Spending Accunt will be tax free. Eligible Expenses IMPORTANT NOTE: Due t HSA rules, if yu enrll in either medical plan yu can nly participate in the Health Care Flexible Spending Accunt n a limited basis, that is, nly dental and visin expense reimbursements may be made frm yur accunt. Expenses eligible fr reimbursement are utlined in IRS Publicatin 502, available nline at which summarizes deductible medical expenses. Please nte while ver the cunter drugs are nt deductible medical expenses, many OTC drugs are eligible fr reimbursement, including allergy, asthma and cld medicines, pain relievers, and antacids (ie, thse used fr the treatment f an illness r injury). Prducts which are nt eligible include tiletries, vitamins, csmetics, etc. Participants may nt be reimbursed fr the cst f ther health cverage such as premiums paid under plans maintained by the emplyer f the Participant s spuse r individual plicies maintained by the Participant, his spuse r dependent. In additin, lng term care services are als nt eligible fr reimbursement. Once yu have incurred an eligible expense, yu can submit a claim fr reimbursement. Yu d nt have t pay the expense first and then get reimbursed. Cautin This infrmatin is nt intended t be tax advice and is subject t change. Fr further infrmatin, yu may wish t cnsult yur tax advisr. 9

10 Dependent Care Flexible Spending Accunt The Plan prvides the pprtunity t pay fr dependent care expenses in a tax-efficient manner. Eligible Dependent Care Expenses include: Baby-sitter/husekeeper csts Licensed day-care center csts Schling csts fr children nt yet in first grade Summer day camp csts fr children under the age f 13 (vernight camp expenses are ineligible) Care-giver fr an adult Transprtatin csts t and frm day care are nt eligible. Relatives, including yur child ver age 19, can be hired t prvide care t dependents, hwever, a dependent whm yu claim as a persnal exemptin n yur tax return cannt be s emplyed. What Are Yur Chices? If yu expect t have dependent care expenses, yu have three chices f favrable tax treatment. Each individual needs t decide n the chice which best fits his/her wn situatin. Chice #1 - The Dependent Care Flexible Spending Accunt The Dependent Care Flexible Spending Accunt allws yu t pay up t $5,000 per calendar year fr yur Dependent Care expenses with mney that is tax free. That is, yu can reduce yur salary up t $5,000 and nt pay any federal, state r scial security/medicare taxes n that reductin. Chice #2 - The Incme Tax Credit Up t certain limits, yu may claim a tax credit n yur federal incme tax return fr a prtin f yur Dependent Care expenses. It is nt a credit against scial security/medicare taxes. Please refer t IRS Publicatin 503 available at fr mre infrmatin. A Vermnt tax credit is als available. Chice #3 - The Dependent Care Flexible Spending Accunt and the Incme Tax Credit In certain circumstances it may make sense t use bth Chice #1 and Chice #2. Eligibility Requirements t receive the tax benefits f either the Accunt r the tax credit are the same. Of curse, yu cannt use bth the Accunt and the tax credit fr the same expenses. The primary purpse f the tax benefit is t help peple with dependent care expenses remain gainfully emplyed r seek emplyment. Yu must be wrking r seeking emplyment in rder t be eligible. If married and living with yur spuse, bth yu and yur spuse must be emplyed r seeking emplyment. In the case f divrced r separated parents, the parent wh has custdy f the dependent fr the lngest perid f time during the calendar year can claim the dependent care expenses. The dependent care expenses that can be applied tward the tax credit r reimbursed frm the Plan cannt be greater than the lwest-paid spuse s annual earnings. Fr example, if yu earn $20,000 a year but yur spuse earns nly $3,000 a year, then yu can nly use $3,000 fr either the tax credit r the Accunt. There are exceptins t this lwest earnings limitatin, s be sure t check ut IRS Publicatin 503 fr mre details. 10

11 T be eligible under either alternative, expenses must be incurred fr qualifying individuals, that is, yur children r stepchildren (r ther individuals wh are yur dependents) and wh are members f yur husehld fr mre than half f the tax year. The definitin als includes anyne in the abve categry wh is mentally r physically incapable f caring fr himself/herself. Any child wh is under age 13 qualifies autmatically. Chice #1 The Dependent Care Flexible Spending Accunt The Accunt permits yu t reduce yur salary by the amunt yu estimate will cver yur dependent care expenses in the cming Plan Year, up t $5,000 if married filing jintly r head f husehld, r $2,500 if married filing a separate return. Yur salary reductin ges int yur spending accunt and can be used t reimburse dependent care expenses. Yu cannt use the accunt fr any ther purpse. By reducing yur salary, the incme yu reprt fr federal, state and scial security/medicare taxes is lwered. The amunt yu save in taxes depends n the amunt f yur salary reductin and yur taxable incme with and withut the salary reductin. Yu can apprximate these savings by figuring ut what yur marginal r tp tax rate is. The higher yur marginal tax rate is, the mre yu save in taxes with this Plan. Chice #2 The Incme Tax Credit Federal Tax Credit A percentage f yur eligible dependent care expenses ($3,000 fr ne dependent and $6,000 fr tw r mre dependents) can be taken annually as a credit n yur federal tax return. The fllwing table utlines the percentage credit that is available at different levels f adjusted grss incme: Adjusted Grss Incme Tax Credit % Adjusted Grss Incme Tax Credit % $15,000 r less 35% $29,001 t $31,000 27% 15,001 t 17,000 34% 31,001 t 33,000 26% 17,001 t 19,000 33% 33,001 t 35,000 25% 19,001 t 21,000 32% 35,001 t 37,000 24% 21,001 t 23,000 31% 37,001 t 39,000 23% 23,001 t 25,000 30% 39,001 t 41,000 22% 25,001 t 27,000 29% 41,001 t 43,000 21% 27,001 t 29,000 28% 43,001 r mre 20% Example: If yu have an adjusted grss incme f $25,000, and eligible dependent care expenses f $2,000, yu may receive a federal incme tax credit f $600 (30% f $2,000). Vermnt Tax Credit The maximum Vermnt dependent care incme tax credit is 50% f the federal credit ($600 x 50% = $300), fr a ttal incme tax credit f $900. This maximum credit may be reduced depending upn earnings. This credit is limited t a Single r Head f Husehld earning $29,999 r less and Married Filing Jintly filers earning $39,999 r less. Chice #3 Cmbining the Tax Credit and Spending Accunt If yu have tw r mre children and greater than $5,000 in dependent care expenses, this chice shuld be cnsidered. As the annual incme tax credit fr tw r mre children has nw increased t $6,000 f eligible expenses which is $1,000 higher than the Dependent Care Flexible Spending Accunt limit f $5,000, it makes sense t als apply fr the tax credit n the additinal $1,000 f expenses, if applicable. The actual tax credit available will be based n adjusted grss incme. 11

12 Which Chice Is Best Fr Yu? Yur chice will depend n yur marginal tax rate, yur adjusted grss incme, the type f incme tax return yu file, the amunt f yur dependent care expenses, and ther factrs such as itemized deductins. While the exclusin and credit use similar definitins and limits, the exclusin can be mre advantageus than the credit t taxpayers wh are in higher tax brackets, but under the scial security ceiling ($106,800 fr 2010). The exclusin creates a benefit equal t the taxpayer s tax bracket (i.e., 28% if the emplyee is in the 28% tax bracket), plus the crrespnding scial security tax reductin. The credit, n the ther hand, is usually mre beneficial t taxpayers with lwer AGI, because the credit may be up t 35% f expenditures, while the benefit frm the exclusin will be less as a result f the taxpayer s lwer tax bracket. The credit phases ut at $43,000 f AGI t 20% f qualified expenses up t $3,000 ($6,000 fr tw r mre qualifying individuals). Example 1: Anne, a single parent, has ne child. She has adjusted grss incme f $30,000 fr 2010 and pays $3,750 a year fr child care. Flexible Spending Accunt Tax Credit Eligible Expense $3,750 $3,000* Blended Tax Rate r Tax Credit x 24.45%** x 27%*** Tax Savings $917 $810 Increase in Spendable Cash $107 * Maximum allwed by IRS fr ne dependent ** Federal 15%; scial security/medicare 7.65%; state 3.6% (federal and state are based n AGI and scial security/medicare is based n grss incme). *** Federal tax credit 27% Result: Anne has $107 mre t spend with the Flexible Spending Accunt. The savings wuld increase t $649 when the Earned Incme Credit is cnsidered. Als nte she can save taxes n $3,750 and is nt limited t a $3,000 maximum allwable expense under the tax credit. Example 2: Jim and Sandy have tw children. They have an AGI f $47,000 fr 2010, filing a jint tax return, and spend $6,000 a year fr child care. Flexible Spending Accunt and Tax Credit Tax Credit Eligible Expense $5,000+ $6,000* Blended Tax Rate r Tax Credit x 25.54%** x 20%*** Tax Savings n FSA $1,277 $1,200 $1,000 expense x 20% ++ $200 Ttal Tax Savings $1,477 Increase in Spendable Cash $277 + Maximum cntributin allwed by IRS fr Flexible Spending Accunt ++ Excess eligible expense fr tax credit after utilizing maximum FSA * Maximum allwed by IRS fr tw dependents ** Federal 15%; scial security/medicare 7.65%; state 3.6% (federal and state are based n AGI and scial security/medicare is based n grss incme). *** Federal tax credit 20% Result: They have $277 mre t spend with the full utilizatin f the Flexible Spending Accunt and 12

13 using the excess $1,000 expense t receive a tax credit. Federal Earned Incme Tax Credit The Earned Incme Tax Credit is fr qualifying wrkers (thse earning less than $43,415 per year) t ffset the impact f scial security taxes. The credit is based n earned incme, which includes wages plus the salary reductin frm a cafeteria plan, salaries, ther cmpensatin, and earnings frm selfemplyment. Earned incme des nt include pensin r scial security benefits. The estimated maximum federal earned incme tax credit fr incme ranging frm $8,950 t $19,540 is $3,043 (ne dependent) r $5,028 (tw dependents). Fr incme greater than $19,540, the credit begins t phase ut, until it is cmpletely phased ut at $38,583 fr ne child and $43,415 fr tw r mre children. Vermnt Earned Incme Tax Credit A Vermnt earned incme tax credit is available in additin t the federal earned incme tax credit. T estimate the Vermnt amunt, multiply the federal earned incme tax credit by 32% and meet additinal AGI and number f children requirements. If yur marginal federal incme tax rate is 28% r mre, the Flexible Spending Accunt will save mre taxes than the dependent care tax credit. If yur marginal federal incme tax rate is 10%, the dependent care tax credit may be mre beneficial. Excess Dependent Care Amunts If yu have excess dependent care expenses after reaching the maximums under either Chice 1 r 2, yu may allcate the excess t the ther chice in certain circumstances. The amunt that a taxpayer may use in calculating the tax credit chice is reduced, dllar fr dllar, by amunts excluded frm incme under the Flexible Spending Accunt. Reprting Requirements The IRS requires taxpayers t reprt dependent care prvider infrmatin n Frm 2441, whether they use the Credit r the Spending Accunt. This frm is used t cmpute the Credit and dependent care expenses, and shw that the funds allcated t the Spending Accunt were used fr that purpse. Cautin This infrmatin is nt intended t be tax advice and is subject t change. Fr further infrmatin, yu may wish t cnsult yur tax advisr. 13

14 Cafeteria Plan Administratin Terminatin f Emplyment under the Cafeteria Plan If yu terminate emplyment, there are rules yu shuld be aware f regarding participatin in the Health and Dependent Care Flexible Spending Accunts. Expenses Incurred Befre Terminatin - Expenses incurred during the Plan Year in which yu leave and befre yur terminatin f emplyment can cntinue t be submitted fr reimbursement. Yu have until May 31 after the end f the Plan Year t submit thse claims. Expenses Incurred After Terminatin - Expenses incurred during the Plan Year in which yu leave and after yur terminatin f emplyment are nt eligible fr reimbursement, hwever, see belw fr exceptins. Cntributins Cease - Yur befre-tax cntributins will stp with yur last paycheck. In additin, any MBA that yu allcated t the Plan(s) will cease as f the end f the mnth in which yu terminate. Yu may elect t make after-tax cntributins t the Plan(s) as described belw. Dependent Care Flexible Spending Accunts - Upn terminatin, yu may cntinue t participate in the Plan fr the balance f that Plan Year n an after-tax basis. Health Care Flexible Spending Accunts - Yu may cntinue t participate in the Plan as a COBRA participant fr the remainder f the plan year in which terminatin ccurred, but nly if yu have cntributed mre mney than yu have taken ut in claims. Fr example, if yu elected t cntribute $500 per year, and at the time yu terminate emplyment, yu have cntributed $300 but nly claimed $150, yu may elect t cntinue cverage and culd cntinue t receive yur health care reimbursements, up t the $500. Hwever, yu must cntinue t pay fr cverage n an after-tax basis. The Plan can als charge yu an extra amunt t prvide this benefit. The Administratr will prvide yu with mre infrmatin if yu becme eligible fr COBRA. Rules fr Mid-Year Electin Changes under the Cafeteria Plan Under IRS rules, nce yu have made an electin, it will remain in frce fr the remainder f the Plan Year (that is, January 1 thrugh December 31). As lng as written ntificatin is prvided t the Plan Administratr within thirty (30) days f an event that caused a change in status, yu are permitted t change an electin fr the fllwing reasns (as lng as the change is cnsistent with the reasn fr the change): On the January 1 plan anniversary each year - Yu are permitted t change yur benefit electin(s) during the annual pen enrllment perid. Marital Status A legal marital status change (including the emplyee s marriage, divrce, legal separatin, annulment, r death f a spuse). Number f Dependents - A change in an emplyee's number f dependents, (including birth, 14

15 adptin, placement fr adptin, r death f a dependent). Emplyment Status A change in the emplyment status f the emplyee, spuse, r dependent, including terminatin r cmmencement f emplyment, reductin r increase in hurs f emplyment (including a switch between part-time and full-time emplyment that wuld change eligibility fr the Plan), strikes and lckuts, cmmencement r return frm an unpaid leave f absence, change in wrksite, r ther emplyment status changes that impact eligibility. Dependent Status A change in an emplyee's unmarried dependent's eligibility (i.e., attainment f a stipulated age, student status, r similar circumstance). Residence r Wrk Site - A change in the place f residence r wrk site f the emplyee, spuse, r dependent. Qualified Medical Child Supprt Order - in the event f a legal rder which requires health cverage fr an emplyee s child, the Plan may change an electin t prvide cverage fr the child, r the emplyee may cancel cverage fr the child if the rder requires the frmer spuse t prvide cverage. Entitlement t Medicare r Medicaid - Emplyees may cancel health cverage fr the emplyee, spuse r dependent if the emplyee, spuse r dependent becmes enrlled under Medicare Part A r Part B r Medicaid. COBRA - Participants may change electins if a qualifying event ccurs, such as if a frmer emplyee is receiving severance pay, in which case it may be pssible t arrange fr pre-tax COBRA premium deductins ut f the severance pay. Cst r Cverage Changes If the cst f a benefit increases r decreases during a Plan Year, the Plan will autmatically increase r decrease the salary reductins f affected participants. If the cst f a benefit increases significantly, r a benefit is significantly changed, added r drpped, affected participants als have the chice t revke their electin and select an alternate ptin (r elect the ptin if it is newly added). Special Enrllment Rights Emplyees may enrll in health cverage fr the emplyee, spuse r dependent if the emplyee, spuse r dependent lses cverage under Medicaid r state children s health plan, r becmes eligible fr state premium assistance t purchase cverage under the health plan, as lng as they request cverage within 60 days. 15

16 Medical and Dental Insurance Premium Cnversin Explanatin If yu chse benefit ptins that cst mre than yur MBA, yu must pay the difference. Premium Cnversin allws yu t make yur cntributin n a pre-tax basis. By ding s yu will be able t reduce yur federal and state incme taxes, and als yur scial security and medicare taxes, as utlined belw: With Premium Cnversin Withut Premium Cnversin Bi-weekly salary Medical Premium Reductin Dental Premium Reductin Taxable Salary Federal Tax Withhlding 0 8 State Tax Withhlding 0 2 Scial Security/Medicare Medical Premium Deductin Dental Premium Deductin Remaining Spendable Pay Increase Per Pay Perid Annual Increase Effective January 1, 2010, each emplyee wh elects Medical and/r Dental cverage that requires an emplyee cntributin will autmatically have their premium paid n a pre-tax basis, unless yu chse therwise. This autmatic electin des nt apply t any funding amunts t a Health Savings Accunt (HSA). If yu chse t fund the HSA fr any differences between the maximum allwed and the amunt the University is funding and/r catch up cntributins available t thse participants age 55 and lder, yu must prvide this infrmatin n yur nline electin frm. If yu have any questins, please cntact Human Resurces at (802) r (802) Declinatin Yu have the right t decline having yur premium deducted n a pre-tax basis. T d s, cntact Jay Wisner t btain a Declinatin Frm. The cmpleted frm must be returned t him n later than 4:00 p.m. n December 15, If yu decline, yu will be given an pprtunity again in 2010 fr the 2011 Plan Year. Please remember that, whenever yu have a mid-year electin change/change in status as utlined previusly, yu can change yur electin at that time. 16