The Dependent Day Care Flexible Spending Account

Transcription

1 S U M M A R Y P L A N D E S C R I P T I O N L-3 Communications Corporation The Dependent Day Care Flexible Spending Account Effective January 1, 2016

2 Table of Contents The Dependent Day Care Flexible Spending Account 1 The Plan Year 1 Before You Begin 1 Eligibility and Participation 2 Who s Eligible 2 Enrolling for Participation 3 How the Dependent Day Care FSA Works 5 Funding Your Dependent Day Care FSA 5 Eligible Dependent Day Care Expenses 6 Reimbursements 7 Receipts 7 Account Statements 8 WageWorks Website 8 EZ Receipts Mobile Application 8 Other Information You Should Know 9 How Reimbursements Can Be Forfeited or Lost 9 Right of Recovery 9 Continued Participation During a Leave of Absence 9 If You Are Transferred 10 When Participation Ends 10 Continued Coverage During a Military Leave of Absence 11 Ownership of Benefits 11 Plan Administration 11 Compliance with Federal Law 12 Claims Procedures 12 Legal Action 12 No Right to Continued Employment 12 Future of the Dependent Day Care FSA 13 Plan Facts 14

3 The Dependent Day Care Flexible Spending Account The Dependent Day Care Flexible Spending Account (the Account ) lets you set aside taxfree dollars which you can then use to pay certain dependent day care expenses. Since you are using tax-free dollars to pay these expenses, you lower your federal income and Social Security taxes. This can ease the financial burden of caring for your children or other IRS-recognized dependents while you work. Participation in the Dependent Day Care Flexible Spending Account (DDCFSA) is completely voluntary. For information about eligible and ineligible DDCFSA expenses, please see the accompanying Dependent Day Care Flexible Spending Account Expenses Supplement. WageWorks is the DDCFSA Administrator. The DDCFSA lets you set aside tax-free dollars from your pay that you can then use to pay certain dependent day care expenses. The Plan Year The DDCFSA is administered on a calendar-year basis (January December), so all references to a Plan Year mean a calendar year. Before You Begin This booklet describes the most important features of the DDCFSA. We ve tried to explain things in everyday language, but you will come across some words and phrases that have specific meanings within the context of the Account. To help you understand them, we ve included their definitions in the text. Also be sure to read the Other Information You Should Know section of this booklet for important information and facts about your rights under the DDCFSA. the dependent day care fsa 1

4 You can use your DDCFSA to pay expenses for a qualifying child for whom you have joint custody if you pay more than half of the child s support and have custody during the Plan Year longer than the other parent. Eligibility and Participation You can use the Dependent Day Care Flexible Spending Account (DDCFSA) to reimburse yourself tax-free for certain dependent day care expenses you have because you (and your spouse, if you are married) work or are looking for work. If your spouse is not working, you can t use your DDCFSA for your dependent day care expenses unless he/she is a full-time student (for at least five months during the Plan Year) or is incapable of caring for himself/herself or for the dependent. Who s Eligible You are eligible to participate in the DDCFSA if it is offered at your business unit and you are: a U.S.-based employee working in the U.S. and regularly scheduled to work 20 hours or more per week; employed in a job classification designated as benefits-eligible; and/or on an approved leave of absence that allows for continuation of benefits. If you are a collectively bargained employee, the terms of your collective bargaining agreement will govern your eligibility. If you have any questions about your eligibility, contact the L-3 Benefit Center at Who qualifies as a dependent. You can use your DDCFSA to cover the expenses of dependents, who are defined as: children under age 13 claimed as dependents on your federal income tax return; anyone living with you who is mentally or physically incapable of self-care, as long as you claim that person as a dependent on your federal income tax return (or could claim that person as a dependent if he/she didn t have a gross annual income of $4,000* or more); or your spouse who is physically or mentally unable to care for himself or herself. You can use your DDCFSA to pay expenses for a qualifying child for whom you have joint custody if you pay more than half of the child s support and have custody during the Plan Year longer than the other parent. The costs associated with caring for an adult also qualify for reimbursement if they live in your home at least eight hours a day, you claim them as a dependent on your federal income tax return and they are completely incapable of caring for themselves. NOTE: DDCFSA rules and provisions that apply to spouses do not apply to same-sex civil union partners or same-sex domestic partners. A DDCFSA cannot be used for reimbursement of expenses to care for a same-sex civil union partner or same-sex domestic partner who is incapable of self-care (unless that person is otherwise your tax dependent). Contact your tax adviser if you have questions. * This limit applies to the 2016 Plan Year and is indexed for inflation every year. 2 eligibility and participation

5 Enrolling for Participation Participation in a DDCFSA is not automatic; you must enroll to participate, and you must re-enroll every Plan Year if you want to continue participating. You can enroll: within 31 days of your eligibility date; during the annual enrollment period, which is held in the fall; or within 60 days of a qualifying event (see Making changes mid-year, below). Your election. When you first join L-3, you will be asked during enrollment whether you want to establish a DDCFSA, and the amount you want to contribute. If you elect to participate, your election takes effect on your first day at work or the first day you became eligible, and stays in effect throughout the rest of the Plan Year, unless you have a qualifying event. Annual enrollment. L-3 holds an annual enrollment each fall during which you can elect to establish a DDCFSA. Your election takes effect on the next January 1 and stays in effect for that full Plan Year, unless you have a qualifying event. Making changes mid-year. The IRS requires that your election stays in effect throughout the full Plan Year unless you have a qualifying event. L-3 abides by the IRS s definition of qualifying events, which includes: your legal marital status changes (e.g., through marriage, divorce, legal separation or annulment) You can t change your election during the Plan Year unless you have a qualifying event. Not all qualifying events enable you to make mid-year changes, and any change you are permitted to make must be directly related to the impact of the event on your benefits or eligibility. the number of your dependents changes (e.g., through the birth or adoption of a child; a change in dependent status under the Internal Revenue Code; or the death of a child or spouse) your spouse or your dependent becomes employed or unemployed you, your spouse or your dependent takes or returns from an unpaid leave of absence your, your spouse s or your dependent s employment status changes from full-time to parttime (or vice versa) or from hourly to salaried (or vice versa) your dependent first meets or no longer satisfies the requirements for coverage because he/she reaches the limiting age, or any similar circumstance you, your spouse or your dependent goes on strike or is locked out, or returns from a strike or lockout there s a significant change in the cost of your dependent day care (e.g., the fees your provider charges to you increase). This does not apply if your dependent day care provider is your relative there s a significant change in your dependent day care coverage (e.g., you change your dependent day care provider from a day care center to a family member or vice versa) you, your spouse or your dependents make a change (or a change is made) under another employer s dependent care reimbursement plan. eligibility and participation 3

6 If you have a qualifying event, you have 60 days from the event to change your contribution election. The change in your election must be due to and consistent with the qualifying event. (For example, if you and your spouse have your second child mid-year, you could increase your DDCFSA contributions.) Your coverage change is retroactive to the date of the qualifying event as long as you provide appropriate written documentation. If you have a qualifying event, you have 60 days from the event to change your coverage election. Contact the L-3 Benefit Center at as soon as you know that an event is about to take place. Contact the L-3 Benefit Center as soon as you know that an event is about to take place (or immediately after it takes place) to make sure you allow yourself enough time to take the appropriate action. The L-3 Benefit Center will explain the procedure to you. 4 eligibility and participation

7 How the Dependent Day Care FSA Works Funding Your Dependent Day Care FSA Consider the following before making your DDCFSA election: The DDCFSA allows you to put away part of your pay tax-free to pay for eligible dependent day care expenses. Your contributions are deducted from your pay before taxes are taken out, so less of your income is taxed. You can contribute from $100 to $5,000 each Plan Year to a DDCFSA. Once you decide how much you ll contribute for the Plan Year, you cannot change your election unless you have a qualifying event. (See page 3.) You can be reimbursed with tax-free dollars from your DDCFSA to pay for eligible expenses. You will not pay taxes on your reimbursement. You cannot deposit cash directly into your DDCFSA, nor can you transfer money from your DDCFSA to a Health Care FSA (or vice versa). You should use all the money in your DDCFSA each Plan Year because the IRS does not allow it to be returned to you or carried over to the next Plan Year. You must re-enroll during the annual enrollment period for each Plan Year that you wish to participate in a DDCFSA. How much you can contribute. You can contribute from $100 to $5,000 per Plan Year to the DDCFSA. The amount you choose will be deducted from your pay and deposited into your Account equally throughout the year. The IRS sets additional limits on your DDCFSA contributions if you re married and your spouse has a DDCFSA through his or her employer. First, you are limited to a combined DDCFSA contribution of $5,000 in a Plan Year. And if you file separate federal income tax returns, the most you can contribute is $2,500 a Plan Year; if you file a joint return, the most you can contribute is $5,000. In either case, you cannot contribute more than you (or your spouse) earn. If your spouse doesn t work, but is either disabled or a full-time student, the IRS considers your spouse s earnings to be $250 a month if you have one eligible dependent and $500 a month if you have more than one eligible dependent. Other limits on how much you can contribute. In addition to the limits on how much you can direct to your DDCFSA each Plan Year, the Internal Revenue Service requires plans with tax-free contributions to prove that they don t favor highly compensated employees, as defined by the IRS. If the DDCFSA does not pass this test, the contributions made by those employees considered highly compensated may have to be reduced or re-characterized as aftertax contributions. If this happens, those affected will be notified. how the DDCFSA works 5

8 The tax advantages. The Internal Revenue Code allows L-3 to take the money you direct to your DDCFSA out of your pay before federal income and FICA taxes are deducted. That lowers your taxable income, so you pay less federal income, Social Security and, in most states, state income tax. What s more, any reimbursements you receive from your DDCFSA are free from federal income tax as long as you have not taken (or do not intend to take) a tax deduction or credit for related expenses when you file your federal income tax return. If you and your spouse file separate federal income tax returns, the most you can contribute to a DDCFSA is $2,500 per Plan Year. Issues to consider. Here s an overview of how having a DDCFSA can affect your cash flow, your annual income tax return and your other benefits. Tax laws are complex and subject to change. You should consult with a tax advisor before signing up for a DDCFSA, especially since you can t change your election mid-year once you ve made it, unless you have a qualifying event. Use your money in the current Plan Year. Use all the money in your DDCFSA each Plan Year because the IRS does not allow it to be returned to you or carried over to the next Plan Year. You have until March 31 of the following Plan Year to submit claims for eligible expenses you had the previous Plan Year. Project your dependent day care expenses carefully. You cannot decide how much to contribute to your DDCFSA as you go along; you must decide how much to deposit for the Plan Year before each Plan Year begins. Once you decide your contribution amount, you generally cannot change it during the Plan Year, unless you have a qualifying event, as determined by the IRS. (See page 3.) Consider your tax strategy. Participating in the DDCFSA can affect your tax strategy when you file your income tax return. Using a DDCFSA for dependent day care expenses limits the tax credits you can take on your income tax return for those expenses. The federal income tax credit lets you subtract a percentage, based on your taxable income, of your expenses for dependent day care from the federal taxes you owe. You can use both your DDCFSA and the tax credit, but you can t claim the same expenses for both. Whatever you apply toward your federal income tax credit is reduced dollar for dollar by what you contribute to your DDCFSA. Currently, the tax credit is $3,000 for one dependent, and $6,000 for two or more dependents. So, for example, if you have one child and contribute $2,000 to your DDCFSA, you can claim $1,000 as a tax credit. Married couples can claim the tax credit only if they file a joint federal income tax return. Ask your tax advisor to help you choose the right alternative for your tax bracket. Transfers not permitted. If you elect to participate in a Health Care FSA as well as a DDCFSA, you cannot transfer money from one Account to another. Consider your other pay-related benefits. While you are reducing your pay for tax purposes, your pay-related benefits (such as your L-3-sponsored life and disability insurance) are not reduced. Your benefits from these plans will be based on your full salary. However, since your FICA taxes are based on your reduced pay, your future Social Security benefits may be slightly lower. Eligible Dependent Day Care Expenses The DDCFSA is subject to IRS requirements. Only those expenses that comply with the Internal Revenue Code are covered. Please see the Dependent Day Care Flexible Spending Account Expenses Supplement for a list of dependent day care expenses for which you can receive reimbursement under a DDCFSA. 6 how the DDCFSA works

9 Reimbursements WageWorks offers two ways to use the money in your DDCFSA to reimburse your eligible health care expenses. Pay online through Pay My Provider. You can pay bills directly from your DDCFSA using the online Pay My Provider tool. Simply log in at select Request Pay My Provider and fill in the requested information. You will be required to submit a copy of your itemized receipt to WageWorks for the payment to be processed. With Pay My Provider, you can request a one-time payment or schedule a recurring payment for eligible services, such as day care. WageWorks will issue payment to your provider within two to three business days of your request being approved. File a claim with Pay Me Back. You can use Pay Me Back to get reimbursed for eligible expenses you pay for out of pocket. To do so, log in at select Dependent Care, and print out a Pay Me Back form. Fill in all the information requested on the form, attach your receipt(s), sign it and follow the instructions to fax or mail it to WageWorks. See Receipts, below, for more information about receipt requirements. You can also file Pay Me Back claims online by selecting the online claim form and filling in all the information requested. Scan your receipt(s) and other supporting documentation and upload them, or print the pre-populated online claim form, attach your receipt(s), sign it and follow the instructions to fax or mail it to WageWorks. You must use all the money in your DDCFSA each Plan Year because the IRS does not allow it to be returned to you or carried over to the next Plan Year. You have until March 31 of the following Plan Year to submit claims for eligible expenses you had the previous Plan Year. You can be reimbursed through your DDCFSA only up to the amount in your Account when you file a claim. Any unpaid amounts still due you will be processed in the next claim cycle when (and if ) you have enough money in your DDCFSA to cover them. If any balance is left in your DDCFSA at the end of the Plan Year, and claims for that balance are not received by March 31 of the following Plan Year, the remaining balance will not be returned to you. These amounts will be used to offset administrative expenses and costs of the Plan. Receipts Keep the following in mind when using receipts or other documentation to file a Pay Me Back claim: The receipt/documentation must contain: provider name (the facility or person who provided the service); date of service (the start and end date for the service provided); service description (a detailed description of the service provided); amount (the amount incurred for the service); and dependent name (the person who received the service). Include a receipt or other documentation for every expense. Handwritten receipts must have provider information stamped on them. Cancelled or carbon copy checks are not considered acceptable forms of documentation. how the DDCFSA works 7

10 Do not send original receipts. (Keep these for your records.) If you attach multiple receipts, circle or check the dollar amount that is being claimed for each receipt. Do not use a highlighter to highlight the dollar amount. Overnight camps are not considered eligible expenses. Do not send receipts for them. You are required to report your dependent day care provider s tax ID number or Social Security number when you file your income tax return. Account Statements Once you register on WageWorks website, you can print a Statement of Activity at any time. Be sure to update your WageWorks profile with your address to take advantage of automatic notifications regarding the status of your claims and direct deposits. WageWorks Website The WageWorks website is a convenient one-stop location for information about your account, including claim activity. When you register on WageWorks website, be sure to include your address in your profile to take advantage of automatic notifications regarding the status of your claims and direct deposits. EZ Receipts Mobile Application The WageWorks EZ Receipts app allows you to check your current Account balance on-the-go. You also can submit claims instantly. 8 how the DDCFSA works

11 Other Information You Should Know This booklet describes the benefits that are offered under the Dependent Day Care Flexible Spending Account (DDCFSA) and the steps you must follow to take full advantage of the Account. The previous sections describe the most important features of the DDCFSA; what you ll find here is important administrative information and facts about your rights as a participant in the DDCFSA. This booklet and the Dependent Day Care Flexible Spending Account Expenses Supplement together provide a complete description of the benefits offered under the DDCFSA. How Reimbursements Can Be Forfeited or Lost Reimbursements can be forfeited or lost under certain situations. Most of these circumstances are also described in other sections. However, reimbursement also may be forfeited or lost if: This section contains important administrative information and facts about your rights as a participant in the DDCFSA. you or your legal representative does not properly file a reimbursement request within the time period required; your claim for reimbursement and appeals are denied and you do not start legal action to recover benefits under the Plan within two years of the date the initial claim for reimbursement was filed with WageWorks; or you do not furnish information required by WageWorks to complete or verify your claim. Your reimbursement also may be delayed or lost entirely if your current address is not on file with L-3 or with WageWorks. You should also know that reimbursements are not payable for dependent day care expenses your dependents may incur after they become ineligible due to age or divorce. Right of Recovery If WageWorks mistakenly pays more for your claim than you re entitled to, it has the right to recover the excess. You must give WageWorks any documents or paperwork it asks for, and you must return any benefit payments that were made in error. Continued Participation During a Leave of Absence If you take a leave of absence, including one that qualifies under the federal Family and Medical Leave Act (FMLA), here s what happens to your participation in the DDCFSA: Paid leaves of absence. If you are on a paid leave of absence, you may continue your participation in your DDCFSA by making pre-tax contributions through payroll deduction. You may change (or revoke) your DDCFSA election due to a qualifying event (as explained on page 3) if your change in election is due to and consistent with the circumstances of your leave. other information 9

12 DDCFSA participation ends when your employment with L-3 ends. Unpaid leaves of absence. When you take an unpaid leave of absence, your DDCFSA participation is suspended, which means that you cannot contribute to your DDCFSA nor file claims for expenses incurred while on leave. You may at that time elect to decrease your DDCFSA contribution, an election that will be effective when your leave ends and you return to paid employment. Please note that you also may change your DDCFSA contribution when you return to work, as long as your election to change is due to a qualifying event (as explained on page 3) and consistent with that qualifying event. Contact the L-3 Benefit Center for further information. If You Are Transferred If you are currently participating in a DDCFSA and are transferred to another L-3 business unit that offers a DDCFSA, your Account balance will be transferred automatically to the new business unit, with your same contributions continued through the end of the Plan Year (unless you change your election because of a qualifying event). If the business unit to which you are transferred does not offer a DDCFSA to its employees, your contributions will end and you can be reimbursed according to the same rules that apply as if you left L-3 (see below). If you are an employee of a business unit that does not offer a DDCFSA and you are transferred to a business unit that offers a DDCFSA, you have 60 days from the date of your transfer to enroll in the DDCFSA. When Participation Ends Your participation in the DDCFSA ends when any of the following happens: your employment terminates you are no longer an eligible employee you transfer to a business unit that does not offer a DDCFSA you retire you die you experience a qualifying event that causes you to end your participation during annual enrollment you do not submit an enrollment form showing a DDCFSA election for the following year L-3 stops offering a DDCFSA. If you leave L-3. If you leave during the Plan Year, your contributions to your DDCFSA end. However, you can still be reimbursed for eligible expenses you incur up to your last day worked. You have until March 31 of the next Plan Year to submit claims. 10 other information

13 If you re rehired. If you leave L-3 and are rehired within 30 days of your termination, your election that was in effect before your termination will be reinstated; you cannot make a new election. If you are rehired more than 30 days after your termination, you may make a new election as a new hire; your prior election will not be reinstated automatically. Continued Coverage During a Military Leave of Absence If you are on a military leave of absence, you and your dependents coverage under the Plan will continue in accordance with the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA). You may request a copy of L-3 s USERRA policy from the L-3 Benefit Center. Ownership of Benefits The benefits described here are exclusively for DDCFSA participants. The coverage and any benefits under the Plan, including the right to receive payments under the Plan, are not assignable by any participant or dependent or anyone else without the written consent of the Plan. Plan Administration L-3 Communications Corporation, as the Plan Administrator, is responsible for the administration of the Plan. The L-3 Benefit Center and L-3 s Human Resources Department act on behalf of the Plan Administrator and are responsible for routine Plan administration and answering questions about eligibility and coverage. The Plan Administrator has the full and complete discretionary authority and responsibility to administer the Plan and may delegate any or all of its authority and responsibility to any individuals or entities. If there is a conflict between the information you receive from WageWorks, the L-3 Benefit Center or L-3 s Human Resources Department and the terms of this Summary Plan Description, the terms of this Summary Plan Description will prevail. The Plan Administrator has delegated to WageWorks the discretionary authority and responsibility to determine claims for benefits under the DDCFSA. WageWorks has the full and complete discretionary authority and responsibility to decide whether you are entitled to benefits under the Plan. WageWorks decision will be final and binding on all persons to the full extent permitted by law. If conflicts arise. The L-3 Benefit Center, the L-3 Human Resources Department and WageWorks will always try to give you the most complete and accurate information regarding the DDCFSA. If there is a conflict between the information you receive from WageWorks, the L-3 Benefit Center or L-3 s Human Resources Department and the terms of this Summary Plan Description, the terms of this Summary Plan Description will prevail. The DDCFSA is part of the L-3 Communications Welfare Plan ( Welfare Plan ). There is an official Plan document for the Welfare Plan. If there is a conflict between the information in this Summary Plan Description and the Welfare Plan document, the terms of the Welfare Plan document will prevail. other information 11

14 If you receive notice that your claim has been denied, either in full or in part, you have 180 days after receipt of the denial to file an appeal in writing with WageWorks. Compliance with Federal Law The DDCFSA is subject to the requirements of the Internal Revenue Code (the Code ) and will be construed and administered in accordance with the Code and any other applicable federal law, in all respects. In the event that there is no controlling federal law, the law of New York will apply (including substantive and procedural law, and without regard to its conflict of laws provision). Claims Procedures To receive the benefits for which you may be eligible under the Plan, you or your beneficiary will first be required to file a claim with WageWorks. Below is a summary of how the claims for benefits will be handled. Initial Claim Approval or Denial Action WageWorks will notify you of claim approval or denial WageWorks will notify you if your claim didn t include enough information You must provide more information to WageWorks, if necessary Timing Within 30 days after claim is received Within 45 days after claim is received At least 45 days from the date you are notified Timing of Appeal Decision Action You can appeal to WageWorks in writing WageWorks will notify you about the appeal decision Timing Within 180 days after the date you were notified Within 30 days after an appeal is received Legal Action You must follow these claims and appeals procedures completely, which require an appeal to WageWorks, before you can take legal action. Any legal action for benefits under the Plan must be started within two years of the date that an initial claim for benefits was filed with WageWorks. No Right to Continued Employment Your eligibility or right to benefits under the Plan does not confer any legal right to continued employment by L-3 or any of its business units. L-3 and each business unit at all times retains the right to discharge any employee at any time, for any reason. 12 other information

15 Future of the Dependent Day Care FSA L-3 intends to continue the DDCFSA indefinitely, but reserves the right to change, terminate, suspend, withdraw, amend or modify the DDCFSA at any time, in any manner, at L-3 s sole discretion, by action of the Vice President, Human Resources of L-3 Communications Corporation, subject to applicable collective bargaining agreements. Any change, termination, suspension, withdrawal, amendment or modification of benefits will be based solely on the decisions of L-3 Communications Corporation. You will be notified of any change; however, the change may be effective before any notice is given to you. The Dependent Day Care Flexible Spending Account is not subject to ERISA. future of the DDCFSA 13

16 Plan Facts Plan Name Employer and Plan Sponsor Employer Identification Number L-3 Communications Welfare Plan L-3 Communications Corporation 600 Third Avenue New York, NY Plan Number 502 Plan Administrator and Named Fiduciary Agent for Service of Legal Process L-3 Communications Corporation c/o Vice President, Human Resources 600 Third Avenue New York, NY Process may be served upon the Plan Administrator at the address indicated above. Plan Year January 1 December 31 Type of Plan Type of Administration Plan Records Plan Funding Welfare, providing dependent day care benefits Self-insured; administrative services contract with: WageWorks 1100 Park Place, 4th Floor San Mateo, CA The records of the Plan are maintained on a calendar-year basis. Employee contributions are made through employee salary reductions; Plan expenses are paid by L-3 and by Dependent Day Care FSA forfeitures. 14 plant facts

17 B-1 DDCFSA