Also: YOUR SUMMARY PLAN DESCRIPTION (SPD)

Transcription

1 Bene-Flex Hawaii, Inc. Cafeteria Plan Administrator What is a Cafeteria Plan or otherwise known as a Flexible Spending Arrangement? Also: YOUR SUMMARY PLAN DESCRIPTION (SPD) P.O. Box 428 Kailua, HI (808) What is a Cafeteria Plan?

2 It is a plan approved by the IRS to help you save more payroll taxes by paying for certain qualified expenses with a pre-tax dollar. The one and only advantage of a Cafeteria plan is to save you, the employee, money. It is not a new medical plan or any other type of insurance plan/policy. It is a new way for you to pay for your current medical/dental/vision/drug and child care expenses. The eligible expenses are paid thru an account fund with a pre-tax salary/wage contribution that will be deducted from your paycheck each pay period. The Cafeteria plan reduces your taxable income because the amount you contribute, from which your reimbursements are made, is taken out of your gross income before your payroll taxes are calculated. Therefore you will pay less Federal, State, Social Security and Medicare taxes. Your employer and Bene-Flex Hawaii, Inc. want you to have as much information as you need to maximize your tax savings benefits through a Cafeteria plan. The materials contained herewithin serve as a brief summary of your election options and other important plan provisions. There is also a legal plan document containing the full legal plan provisions which can be made available to you at any time in your employer s personel office. Enrollment in your Cafeteria plan is totally voluntary and you have the choice to enroll in one or more of the following options: 1 Health Insurance premiums 2 Supplemental Insurance premiums 3-Dependent/Child care account (DDC) 4-Health Care expense Reimbursement account (URM) The Health Insurance option provides you with the opportunity to pay for your Medical/Dental/ Vision & Drug insurance (ie: HMSA, Kaiser) with a pre-tax dollar. Also eligible are the Supplemental products you may have purchased from one of the national carries for items such as Cancer insurance, AD&D & Group term life insurance. The dependent care option will be covered on page 6. The Health Care Expense Reimbursement option complements your group health care benefits. Your health insurance usually pays for the basic expenses related to an illness or injury, however there are still some out-ofpocket expenses which it does not cover. Examples of these items can be found on pages 3-5. In order to participate in a Cafeteria plan an employee must have completed at least a certain number of month(s) of service on a full or regular part-time basis as determined by your employer. Dependent/Child Care: The dependent/child care option provides a tax savings opportunity if you have dependent/child care expenses which enable you & your spouse, if you are married, to work or attend school on a full-time basis. These expenses can be paid out of the Dependent/Child are account. Your election and amount for this category can be changed as you make changes to you child s care thorughout the year. However, you must notify Bene-Flex Hawaii, Inc in advance of any change to your election. Qualified dependents include any child under the age of 13 or anyone who is physically or mentally unable to care for his/her self and related to you and listed as a dependent on your income tax return. You must claim this person on you income tax return as a legal dependent and they must spend at least 8 hours per day in your household. If you are married, reimbursements from your dependent/child are account can only be made if one of the following conditions occurs: both you and your spouse are working, your spouse is disabled or your spouse is a full-time student. There is a maximum annual contribution of $5, set by the IRS per household (married filing a joint return), (single or divorced $2,500.00). The reimbursement from your dependent care account cannot be made beyond the balance of your account. If your request exceeds the account balance, the reimbursements will only be made as additional contributions are received. These reimbursements will then be made automatically. The flowing is a list of dependent/child care services that he IRS defines as eligible:

3 Payments to nursery, preschools, day care centers, after and before school care, summer programs, intercession care. These services must be non-educational in nature and you must be able to provide the Federal tax ID # of your provider. Any sports, boating, yachting, swimming, foreign language and musical classes are ineligible for reimbursement. The law also provides for payments made to individuals excluding your dependents and your children under age 19 who provide care for dependent adults and payment for household services related to the care of a dependent adult. Over-the-Counter (OTC) Items After January 2, 2011 only by Prescription Acid reducers Ear/Eye medication Acne medication Gas Relief drops Antacids: liquid, tablets Hemorroid relief Anti-diarrhea medications Itch Relief Antifungal treatments Laxatives Antiseptics: ointments, washes Lice control Asthma Inhalers Medical Equipment ie: thermometers, blood pressure machines Bandages, gauze, tape Pregnancy test, ovulation kits Decongestants Nasal Sprays (non saline), Benzocaine Orajel Cold, Flu, Allergy Medications Pain Relief Cold Sore, fever blister treatments Sinus Medications Condoms Sleeping aids Cough Suppressants, syrups Vapor patches, rubs Diabetes supplies, test strips, meters Wart Removal The following OTC itmes are not eligible for reimbursement because either they do not contain any medication or drugs or do not meet the IRS guidelines: Vitamins/Minerals/Supplements Baby lotion, bottles, diaper creams, oil, wipes Cosmetics/Fragrances Dental Floss, Toothbrushes, Tooth paste Feminine care products Herbs w/o an acupuncture treatment Sun tanning products Alchol/Hydrogen Peroxide Band-aids Aromatherapy Petroleum Jelly Low Calorie Foods Cotton Swabs Shampoos/Conditioners Skin care Products Deodorants Breast Enhancement Airborne & Zicam Products The lists provided are intended to be a guide, however the IRS changes the regulations from time to time. If you have a specific question please feel free to contact our office to discuss your situation. This period is considered your probation period. An employee who is eligible and wishes to participate in the Cafeteria plan must submit an enrollment form during the next open enrollment period following their completion of the set probationary period. Contributions: When you enroll in the plan you must elect a total dollar amount by category for the entire plan year. Your amount is then deducted equally from each of your gross paychecks. The maximum contribution amount you choose for

4 your Medical Expense account may be subject to a schedule of contributions provided by your employer or your plan document. Your contriburtions are elected from each plan year just prior to the start of the plan year and cannot be changed until the following plan year or unless you qualify for a Family Life Status Change, please see below. In filing out your contribution election form you should consider estimating your health care expenses for the entire plan year. Changing your Contribution Amount: Once your contribution amount is set at enrollment, it can only be changed under certain circumstances/exceptions. These circumstances/exceptions are referred to as Family Life Status Changes and they are as follows: -Marriage or Divorce -Birth or Adoption of a qualified dependent -Death of your spouse or qualified dependent -Change in the employment of your spouse The above changes will allow you to make the necessary changes that otherwise would only be allowed during the annual open enrollment. To make the changes please notify your employer contact person and fill out a new contribution election form. Your employer will notify Bene-Flex Hawaii, Inc. Requesting Reimbursement: To request a reimbursement from your Medical or Dependent care expense account, simply complete an expense voucher attaching your supporting documentation and mail or fax it directly to Bene-Flex Hawaii, Inc. Your supporting documentation can be any of the following: Insurance Explanation of Benefits (EOB), company statement, doctor s billing or receipt. Please be sure that your supporting documentation shows all of following information: date of service, services rendered, person s name for whom the expense is for, amount paid, providers name & address as well as insurance if applicable. You may request reimbursement from your Medical Expense account for any amount incurred during the plan year up to the annual contribution amount at any time during the plan year. For example, if your annual amout is $1, and during the second month of the plan year you submit a request for the entire $1, even though you only have $ physically in your account we are required by law to reimburse you up to your annual election amount. Your dependent care account works a bit differently in that you can only be reimbursed, once services have been rendered, you have paid in full and the funds have been deposited with us by your employer. Therefore you cannot advance draw from your dependent care account All claims must meet the minimum reimbursement amount of $25.00 unless your annual remaining amount is less than $ Separation from Employment: A participant whose employment terminates during the plan year is only allowed to incur the expenses up to the effective date of separation. Any expenses incurred after that date are not eligible for reimbursement without a COBRA election. Other Rights & Benefits: The rights of employees to benefits under this plan are intended to be legally enforceable, but nether the establishment of this plan nor any amendment thereof will be construed as granting to any persons (including any provider of services) any legal or equitable right against your employer. This plan shall be maintained for the exclusive benefit of the employees. Your employer intends to continue this plan as long as the salary reduction contributions are withheld from your gross income. The continuance of the plan is purely voluntary on your employer s part, however, they reserve the right to terminate or amend the plan at any time. If the plan is terminated, you can still be reimbursed for eligible expenses you incurred during the plan year until all of your contributions have been utilized. The foregoing information is a summary which gives you a brief description of this plan. If this description and the actual provision of the plan are inconsistent, the plan document will govern and prevail.

5 EXAMPLES OF EXPENSES ELIGIBLE FOR REIMBURSEMENT WITHIN YOUR CAFETERIA PLAN Acupuncture/Shiatsu Ambulance Artificial Teeth Birth Control pills Braces Braille - Books & Magazines Car controls for the handicapped Care for mentally handicapped child Orthopedic Shoes & other devices Chiropractors Christian Science pract.s' fees Copayments (Medical/Dental/Vision) LASIK Hospitalization Medical svcs & clinical care Mentally handicapped persons' home cost Nurse's fees: including board Hearing devices & batteries Operations Obstetrical expenses Oxygen Physician fees Dentures Dental Fees Physician recommended items w/letter of medical necessity Contact lenses, solution/cleaners Physician - recommended weight loss Psychiatric care, Psychologist Diagnostic fees Cost of operations & Related Treatments Laboratory fees Routine physicals and other non-diagnostic services or treatments Seeing-eye dog and its maintenance Drug/medical supplies by prescription Eyeglasses, eye exams Fee of practical nurse Special plumbing for the handicapped Fees for healing services Hair transplants (non cosmetic) Handicapped persons' special schools Telephone: special for hearing impaired Special education for the blind Sterilization fees Surgical fees Wheelchair & maintanence Wigs (for medical reasons) X-rays Hospital bills Insulin & supplies Television audio display equipment for the earing impaired Therapeutic care for drug and alcohol addiction Therapy treatments/naturopathy Crutches Transportation expenses primarily in the rendering of medical svcs University or private school breakdown of medical charges SUMMARY PLAN DESCRIPTION (SPD) The amounts you may contribute to this plan are TAX FREE, meaning that you will not have any Federal Income Tax, State Income Tax or Social Security/Medicare Tax withheld from these monies. The IRS or State in which you live may at any time make changes to this.

6 To be eligible for reimbursement, an expense must be a medical, dental, Rx or Vision expense that your medical insurance has participated in OR provides that you have no coverage for. Medical care means diagnosis, cure, treatment or preventing of disease related to an existing medical condition or a newly diagnosed condition. You can not be reimbursed for any Cosmetic Surgery unless it is a congenital defect or as a result of injury. Any procedure considered Cosmetic would improve your appearance that also includes teeth whitening and is not eligible. Medical care can also be defined by the Internal Revenue Service: You must be sick or injured in order to get well. OTC is defined as Over the Counter Drugs and Medicines. Many of the larger stores are now showing on the cash register receipt those items approved by the Internal Revenue Service as FSA eligible. OTC will only be reimbursed after January 1, 2011 by prescription from a licensed MD. To file a claim you are required to clearly show who the patient is (by name), what procedure has been performed, the date of Service and your co-payment amount. Most HMSA, UHA, Kaiser statements, clearly comply with this requirement. Your claim must be INCURRED within the plan year. Any claims incurred prior to or after the plan year is not eligible (unless your employer has selected the 75 day extension). Please remember that it is NOT WHEN PAYMENT IS MADE, BUT WHEN SERVICES WERE RENDERED. The maximum amount you may contribute to this plan (Unreimbursed Medical expense reimbursement) is determined by your employer. At the beginning of your plan year, there may not sufficient funds in your company s account to pay a large claim, you must allow time for your employer to remit funds to cover your claims. Dependent care expense reimbursement is allowable only if you and your spouse (if applicable) work and your dependent meets the qualification as a dependent and: 1. is under the age of 13 or 2. is over the age of 13 and medically unable to care for themselves due to physical or mental reasons confirmed by a medical doctor. If married, both you and your spouse must be working during the period of the day that care is rendered or if you or your spouse are full time students or incapable of being able to care for themselves. Reimbursement for Dependent care has different rules for reimbursement. Services must be completely rendered and paid for before reimbursement can be made. Most providers require payment at the beginning of the period of service, however, Internal Revenue Service regulations do not permit reimbursement prior to the end of that service having been rendered (in most cases, meaning the end of that month). Additionally, you may not be reimbursed for

7 more than what funds are in your account. Example: you have $ in your account and file a claim for services rendered in an amount of $ You can only be reimbursed $ as IRS regulations allow reimbursement only to extent of funds being in your account. Care must be provided outside your home, unless your dependent is over the age of 13 and physically or mentally disabled and medically required to have supervision of at least 8 hours per day. Payment for services cannot be made to a member of your household or any member of your family that you can claim on your income tax return. Overnight camps are not a covered item, nor are any care that may be deemed educational or teach a life skill. Should you change your provider, you may make a change in the amount of month participation or you may cancel your participation should you lose your provider and not replace the provider with another provider. Dependent care is limited to $5, per calendar year if married filing a joint return or $2, if single, head of household or filing a separate tax return from your spouse. Your election for items covered under this plan are irrevocable for the entire plan year unless you have a qualifying event (Family Status Change). Any change in status may include: 1. Your marital status, get married, get divorced or certain legal separations. 2. The number of income tax deductions, such as birth of child, death of a child or adoption of a child. 3. You or your spouse changing your job status, loss of job, being cut back from full time to part-time that would affect benefits provided from that employer. 4. You move more than 65 miles from your present residence. 5. A court ordered judgment or court order or decree affecting the coverage you have to provide your dependents. 6. Your spouse losing benefits covered under this plan. Any changes (Status Change) may only be changed as long as it is consistent with the type of change. Funds you elect may not be transferred from one (Unreimbursed Medical Expense Reimbursement) to any other category (Dependent Care Reimbursement)