Day Care Savings Account Program

Transcription

1 Day Care Savings Account Program Effective: March 1, 2011

2 Table of Contents Introduction 3 Important Contact Information 4 Eligibility 5 Associate Eligibility 5 Rehire/Reinstatement 5 Enrollment 6 New Hire 6 Annual Open Enrollment 6 Special Enrollment 7 Change in Status Events 8 Late Enrollment 9 Contributions 10 Establishing the Contribution Amount 10 Maximum Contribution Amounts 10 Your Paychecks 10 Program Benefits 11 Eligible Dependents 11 Covered Providers 11 Reimbursable Expenses 12 Non-Reimbursable Expenses 12 Claims Information 13 Obtaining Reimbursement from Your Day Care Savings Account 13 Deadline for Submitting Reimbursement Requests 13 Explanation of Benefits 13 Appealing an Enrollment or Eligibility Status Decision 14 Other Information 15 Tax Reporting Requirements 15 Child and Dependent Care Tax Credit 15 When Participation Ends 16 Glossary 17 2

3 Introduction CarMax, Inc. offers eligible Associates the opportunity to participate in the CarMax, Inc. Day Care Savings Account Program, generally referred to in this document as DCSA or the Program. The DCSA is a convenient way to set aside a portion of your income to pay for certain dependent day care expenses. The DCSA permits eligible employees to set aside a portion of their pay to cover certain outof-pocket day care expenses. The DCSA, funded with before-tax contributions deducted from your pay, lowers your taxable income by allowing you to pay less: Federal Income Tax FICA Tax (Social Security and Medicare) State and local income taxes in many states This document is designed to be an easy-to-read information resource about the CarMax Day Care Savings Account Program. A number of terms in this document have a special meaning and begin with a capital letter. These terms are defined throughout this document or in the Glossary section. This Document and Other Plan Documents This document summarizes the DCSA Program, effective March 1, 2011, except as otherwise noted. The Program is subject to the terms of the CarMax Inc. Pre-tax Flexible Benefits Plan document, as amended and restated March 1, If the terms of this document conflict with the terms of the Plan document, the terms of the Plan document will prevail. The DCSA Program is an important part of the total benefits program. You should read this information carefully, share it with family members, and keep it with your other important records. The DCSA Program is administered by ADP. Information about this Program is located on the CarMax World - Benefits Tab and on in the HR Resource Library. The Company reserves the right to revise or terminate the DCSA Program, in whole or in part, at any time and without prior notice to you. The Company also may revise the Program as necessary to comply with law. 3

4 Important Contact Information Types of Questions Who To Call Claims and Reimbursements For questions on what is reimbursable under the Program and what is not How to obtain a claim form Where to send claim forms and information What to do when you are asked to substantiate a stored value card expense ADP FlexDirect (800) :00 a.m. to 8:00 p.m., ET Monday through Friday Other Questions: Eligibility to participate Enrollment Payroll deductions CarMax Benefits Service Center (888) (888-MYKMXHR), option 6 10:00 a.m. to 8:00 p.m., ET Monday through Friday Completed claim forms and receipts should be mailed or faxed to: ADP Claims Processing P.O. Box 1853 Alpharetta, GA Fax # (678)

5 Eligibility This section provides information about the individuals who are eligible for coverage and the date that they become eligible for coverage. Please refer to the Enrollment Section of this document for information about how to enroll and the resulting effective date of your coverage. Associate Eligibility All regular Full-time or Part-time Associates are eligible to participate in this Program. You are eligible to join the Program on the first of the month following one calendar month of continuous employment (this period is called the Waiting Period). -For example, if you were hired on May 2, you would be eligible to join the Program on July 1 (the Waiting Period would be May 2 to June 30). To participate in the Program, you must enroll as described in the Enrollment section of this document. Rehire/Reinstatement In accordance with the Associate Classifications, Status & Status Changes, Rehire & Reinstatement Policy (available on the CarMax Way): If you terminate employment and are later rehired, you will become eligible to participate effective the first of the month following one calendar month of continuous employment. You must re-enroll in coverage prior to that date. If you terminate employment and are later reinstated, you will become eligible to participate on the first of the month following your return to work. You must re-enroll within 30 days of your return to work. Your participation will begin on the first day of the month following your election. 5

6 Enrollment All enrollments must be completed online at Paper enrollment forms will not be accepted. If you have questions or need assistance, contact the CarMax Benefits Service Center at MYKMXHR ( ). The Program operates on a 12-month Plan Year that begins on March 1 and ends on February 28/29 each year. The Program elections you make are made on a Plan Year basis. Once you have made your elections for a Plan Year, they pertain to the entire Plan Year and cannot be changed or cancelled during that time except in certain limited situations, which are described below. When you make your elections, you also authorize the necessary salary reductions for your contributions to the Program. This section refers to the general enrollment guidelines for Associates who wish to enroll in the Program. The following information details the rules governing the timing requirements for making elections. This is called the Enrollment Period. The Effective Date of Coverage is the date as of which you are eligible to have coverage under the Program (provided you enroll within your Enrollment Period). New Hire If you are a new Associate, you have the option of enrolling in the Program or waiving coverage when you are first eligible. The election you make at this time is applicable for the remainder of that Plan Year. Your election will be effective the first day of the month following one calendar month from your date of hire provided you make your election within the required Enrollment Period. The Enrollment Period for a Newly Hired Associate is as follows: New Hires must make an election by the later of (a) your Effective Date of Coverage, or (b) 30 days from your date of hire. If you have questions about your Enrollment Period or your Effective Date of Coverage, contact the Benefits Service Center at Annual Open Enrollment The DCSA Program operates on an annual basis, from March 1 to February 28/29. Each one-year period is referred to as the Plan Year. Annual participation is not automatic. You must enroll each year during Open Enrollment to participate in the DCSA Program. Open Enrollment is held each year in January for coverage beginning March 1. If you do not enroll during Open Enrollment for the next Plan Year, your participation in the DCSA Program will terminate as of February 28/29 of the current Plan Year. If your participation terminates, you may not enroll again until the next Open Enrollment period unless you have a Qualified Change in Status (refer to the chart entitled Change in Status Events ) or a change in your employment status. 6

7 Enrollment Special Enrollment If you experience a Change in Family Status as defined by the IRS (see chart on next page), you may be able to enroll in the Program or change your Annual Pledge without having to wait until the next Annual Open Enrollment. Any change in participation must be consistent with your change in status. Generally, the Effective Date of Coverage will be the first day of the month following the date you complete your election. You will be required to provide documentation of the Change in Status event. You will be contacted by the CarMax Benefits Service Center and provided a list of acceptable documents. Failure to submit the required documentation will result in the requested change in coverage being rejected. For all events listed, your election must be received online at within 30 days of the event. Late Enrollment provisions apply if you do not enroll within this time period. (See section titled Late Enrollment. ) Please note that all mid-year changes are subject to the limitations of the Program. Associates may not decrease coverage below the amount that has been reimbursed to them by the Program during the Plan Year of the Change in Status. Associates may not exceed the Annual Pledge Maximums established by the Program, nor may they contribute less than the Annual Pledge Minimum during the Plan Year. 7

8 Enrollment Special Enrollment (continued ) All elections must be consistent with the Change in Status Event that applies at the time of the election. In some cases, you may be required to provide documentation of the Change in Status Event. If you are required to provide such documentation, you will be contacted by the CarMax Benefits Service Center. Change in Status Events Event Allowable Changes Election (Enrollment) Period Marriage Divorce or Legal Separation (as determined by state law) May decrease Annual Pledge May enroll or increase Annual Pledge May decrease Annual Pledge May enroll, increase or decrease Annual Pledge Between the Marriage Event Date and the last day of the Plan Year (February 28/29). Between the Divorce or Legal Separation Date and the last day of the Plan Year (February 28/29) Effective Date of Change in Annual Pledge Amount New pledge amount will be effective the first day of the month after the election is made New pledge amount will be effective the first day of the month after the election is made Birth, Adoption, or Placement for Adoption May enroll or increase Annual Pledge Between the Date of Birth, Adoption or Placement for Adoption and the last day of the Plan Year (February 28/29). New pledge amount will be effective on the first day of the month following the election. Death of dependent May decrease Annual Pledge Within the Plan Year in which the death occurs New pledge amount will be effective the first day of the month after the election is made Change in dependent child status: No longer meets eligibility requirements Becomes an eligible dependent May decrease Annual Pledge May enroll or increase Annual Pledge Between the Event Date and the last day of the Plan Year (February 28/29). New pledge amount will be effective the first day of the month after the election is made Loss of coverage due to: Termination of employment Status change Divorce Death Open Enrollment May enroll or increase Annual Pledge Between the Event Date and the last day of the Plan Year (February 28/29). New pledge mount will be effective the first day of the month after the election is made Spouse or Domestic Partner becomes eligible for coverage due to: Newly hired Status change Open Enrollment May decrease Annual Pledge Between the Event Date and the last day of the Plan Year (February 28/29). New pledge amount will be effective the first day of the month after the election is made 8

9 Enrollment Special Enrollment (continued ) Change in Status Events (continued ) Event Allowable Changes Election (Enrollment) Period Leave of Absence* May cancel participation or change contribution amount Between the Event Date and the last day of the Plan Year (February 28/29). Effective Date of Change in Annual Pledge Amount New pledge amount will be effective the first day of the month after the election is made Loss of Child Custody Other events May cancel participation or change contribution amount Coverage changes that are permissible in accordance with governmental regulations Between the Event Date and the last day of the Plan Year (February 28/29). Varies by event New pledge amount will be effective the first day of the month after the election is made Varies by event * Special Rules for Leaves of Absence: If you are required to go on a leave of absence, you will be permitted to make an election to change the amount of your contribution at the time you go on leave and again when you return to work. If no change is elected, contributions will cease with your final paycheck and resume when you return. You will not be responsible for the contributions missed while you were not receiving a paycheck. Please note that while you are on leave, you may not be eligible for reimbursement of day care expenses based on IRS regulations. Late Enrollment If you fail to enroll or change your election within 30 days of the Change in Status Event, you can enroll or change your election effective the first of the month following the date you submit your election via provided the change is reported within the same Plan Year as the Change in Status Event and the change is consistent with the Change in Status. Late Enrollment is only applicable to Change in Status Events as defined in the Plan. If you are subject to the Late Enrollment provisions of the Program, you should contact the CarMax Benefits Service Center at (888) for more information on how to enroll. 9

10 Contributions The DCSA Program lets you set aside a portion of your income to pay for eligible dependent day care expenses. Contributions are deducted from your pay on a before-tax basis, reducing the amount of income on which taxes are based. Therefore, the amount you will pay in income taxes is less. Please note that you will not pay Social Security taxes on amounts you contribute under the DCSA Program. This may reduce your future Social Security benefits. In most cases, the reduction in Social Security benefits is very small. Establishing the Contribution Amount You determine how much to contribute during each Plan Year when you enroll. The amount you elect to contribute cannot be changed during the Plan Year, unless you experience a Change in Status Event. See the Special Enrollment section of this document for more information. Contributions made during a Plan Year can only be used to pay for services received during that Plan Year. Any amounts remaining in your account at the end of a Plan Year cannot be carried over to the following Plan Year. Therefore, it is essential that you carefully estimate your expenses before enrolling to make sure that you do not contribute more than you can afford or more than you will need. Maximum Contribution Amounts The Internal Revenue Service limits the amount you can contribute under the Program during a taxable year. The maximum amount you can contribute during a taxable year is the lesser of: $5,000, or $2,500 if you are married and file separately; your earned income for the taxable year (For example, if you begin working late in a taxable year and earn only $1,000 that year); or if you are married at the close of the taxable year, the lesser of (i) your earned income for the taxable year, or (ii) the earned income of your spouse for the taxable year. For this purpose, your spouse will be deemed to have earned income of $250 per month for one dependent ($500 per month for two or more dependents) for each month in which your spouse is disabled or a full-time student. If your spouse s employer also offers a Day Care Savings Account Program and you file a joint federal income tax return with your spouse, you and your spouse can participate in your respective programs, but the total of all contributions under both programs cannot exceed $5,000 during a taxable year. Your Paychecks Because contributions are made on a before-tax basis, your paycheck will show actual pay and taxable pay. Taxable pay is pay after your contributions have been deducted. Contributions under the DCSA Program will be deducted from your paycheck after any other before-tax deductions. However, if you participate in the 401(k) Plan, your DCSA contributions will be deducted from your paycheck before your 401(k) contributions. If the amount of money left in your paycheck after your other before-tax deductions have been taken out is less than your elected DCSA contributions, then your contribution for that pay period will be reduced to what is left in the paycheck. Your DCSA contribution will be reduced, or not deducted from your paycheck, if deducting the full contribution would prevent you from satisfying any required after-tax deduction. 10

11 Program Benefits Under the DCSA Program, you receive reimbursements for certain dependent day care expenses that are incurred between your effective date and the date your participation ends. Eligible Dependents Only expenses incurred on behalf of an eligible dependent can be reimbursed under the DCSA Program. An eligible dependent can be any one of the following: a child under the age of 13 whom you are entitled to claim as a dependent on your federal income tax return, any other dependent (or someone you could claim as a dependent except that the person had gross income in excess of the exemption amount) who is disabled and who resides with you for more than one-half of the year; or a disabled dependent or spouse who resides with you for more than one-half of the year. A disabled dependent or spouse is someone who is physically or mentally unable to care for him or herself. Persons who cannot dress, clean or feed themselves because of physical or mental problems are considered unable to care for themselves. Also, persons who must have constant attention to prevent them from injuring themselves or others are considered unable to care for themselves. Covered Providers You select the dependent care provider you want to use. A provider may be: A day care facility A neighbor An au pair or nanny Before and after school programs whose primary function is to watch your child while you are at work or school Pre-school Summer day camp Family day care homes Senior day care homes Facilities that provide care for more than six individuals not residing at the facility must comply with applicable state and local laws and regulations. Providers must give you their Social Security Number or Federal Taxpayer ID Number for income tax reporting purposes and an itemized receipt with the dates of service. See the Tax Reporting Requirements section of this document for more information. 11

12 Program Benefits Reimbursable Expenses Day care expenses are eligible for reimbursement under the DCSA Program only if they enable you to work. If you are married, then your spouse also must work, unless your spouse is disabled or a full-time student at least five months during the year while you are working. The following expenses are reimbursable through the DCSA Program: Expenses for a qualified day care provider, in the home or outside of the home Expenses for a babysitter, au pair, nanny, or neighbor who watches your dependent Expenses for a summer day camp Expenses for before and after school programs whose primary function is to watch your child until you return home Expenses for overnight care, if you work an overnight shift Expenses for daytime care, while a parent who works the night shift is sleeping during the day Preschool tuition Periodically throughout the year, an Account Summary will be mailed to your home. Account Summaries will display all account activity that took place for the prior period. Non-Reimbursable Expenses The following expenses are not reimbursable through the DCSA Program: Expenses for medical care Day care provided by your own child under age 19 or another dependent Day care used for non-work related reasons Expenses for overnight camp Expenses for kindergarten fees Day care expenses incurred while your spouse does not work, unless your spouse is a full-time student or is disabled Expenses paid by another organization or provided without cost Transportation to and from the day care location Care provided for a non-disabled dependent age 13 or over Care provided in a nursing home Care provided in a group care center that does not meet the requirements of state and local laws Costs for clothing, entertainment, or food Expenses incurred before your Eligibility Date or before the applicable Plan Year Expenses incurred after the applicable Plan Year If you have any questions about whether or not an expense is reimbursable, please call the ADP FlexDirect Team at (800) or visit 12

13 Claims Information Reimbursements are processed based on the dates that the day care services are incurred. You will be reimbursed up to the balance in your account at the time the Reimbursement Request was processed. If the Reimbursement Request is more than the balance in your account, you will receive a reimbursement up to the balance. The remaining reimbursement will be processed when the account has funds to cover the request. You do not have to file a second claim. Obtaining Reimbursement from Your Day Care Savings Account Under this Program, you must complete and submit either a written or electronic claim for reimbursement. The following is a summary of the reimbursement process for each. Paper Claims When you incur an eligible expense, you file a claim with the Program s third party administrator, ADP FlexDirect, by completing and submitting a Request for Reimbursement Form. You may submit the paper form by mail or by fax. You may obtain a Request for Reimbursement Form from the CarMax World Benefits Tab, or via the FlexDirect Website - If you choose to download a claim form and complete it by hand, you will need your FlexID. The FlexID is a unique identification number provided to you by ADP which allows you to submit your plan related forms to ADP without using your Social Security Number. You can obtain your unique FlexID number by simply going onto the ADP FlexDirect Website - or contacting the CarMax Benefits Service Center at and selecting Option 6. You must include with the Form a written statement from an independent third party (e.g., a receipt) associated with each expense that indicates the following: The nature of the expense The dates for which the expense was incurred The amount of the expense Electronic Claim Submission You can also complete claim forms electronically on the FlexDirect Website - and then submit them to ADP along with the proper documentation (e.g., a receipt from your Day Care Provider, etc ). When completing a claim form online, your personal information will not be required as it is embedded within an encrypted barcode. This is the recommended method for completing your claims. ADP FlexDirect will process the claim once it receives your Request for Reimbursement Form. Reimbursement for expenses that are determined to be eligible will be made as soon as possible after receiving the claim and processing it. If the expense is determined not to be an eligible expense, you will receive notification of this determination. You must submit all claims for reimbursement for eligible expenses by May 29 following the end of the Plan Year in which the expenses were incurred. Deadline for Submitting Reimbursement Requests You will have 90 days following the end of a Plan Year (until May 29) to submit any expenses for reimbursement that were incurred during that Plan Year. After the 90-day period has expired, IRS regulations require that any remaining balance in your account be forfeited. This is often referred to as the use it or lose it rule. If your employment with the Company terminates, you will have 90 days following the end of the Plan Year in which you terminated to submit any expenses for reimbursement that were incurred while you were employed by the Company. Only expenses incurred prior to your date of termination will be eligible for reimbursement. After this period, any remaining balance in your account will be forfeited. Explanation of Benefits Each time a Reimbursement Request is processed, an Explanation of Benefits (EOB) will be mailed to you. It explains how much was paid on that Reimbursement Request and other account information. 13

14 Claims Information Appealing an Enrollment or Eligibility Status Decision If you disagree with the Plan s determination regarding your enrollment or eligibility, or any other matter other than a claim for benefits, you have 90 days from the date of the determination to request an appeal. Send the appeal request to: CarMax, Inc. Plan Administrator Tuckahoe Creek Parkway Richmond, VA You will receive written notice of the Plan s determination within 90 days after the date CarMax receives your appeal request, unless an extension is required. Deadline to Bring Legal Action You must complete the claims and appeals processes described above before you may bring legal action. You may not file a lawsuit if your initial claim or appeal is not made within the time periods set forth above. Once you have completed the claims and appeals process described above, you must file any lawsuit related to your claim within 180 days of the Plan s final decision on appeal. You may not file suit after this 180-day period expires. Forum for Legal Action Any lawsuit related to your claim or this Plan may only be brought by you or your representative in Federal District Court in Richmond, Virginia, which will be the exclusive forum for such suits. 14

15 Other Information In the event that relevant facts about your enrollment are inaccurate or administrative errors occur, an adjustment will be made. Additional contributions from you or a refund to you may be required to correct the situation. In any event, the terms of the DCSA Program and/or other Company policies will prevail. Tax Reporting Requirements Although you will not have to pay federal income taxes or Social Security taxes on amounts you contribute under the DCSA Program, your total contributions will be recorded in a separate box on your Form W-2. When preparing your income tax return, you should complete and file an IRS Form 2441 or Schedule 2. Form 2441 or Schedule 2 requires that you report the name, address and Federal Taxpayer ID number of your dependent care provider(s). These forms are submitted to the IRS to identify day care reimbursements received through the DCSA Program and to calculate any expense that may remain eligible for the IRS Dependent Care Tax Credit. You can request the identifying information from your day care provider(s) on IRS Form W-10. Form W- 10 does not need to be filed with any government agency, but should be retained for your own records. Child and Dependent Care Tax Credit IRS rules let you claim a tax credit for day care expenses of up to $3,000 for one dependent or up to $6,000 for two or more dependents. The expenses you can apply towards the tax credit will be reduced dollar for dollar by the amount of expenses reimbursed from your account under the Program. The size of the tax credit for which you are eligible is based on your income. You should review IRS Publication 503, Child and Dependent Care Expenses, or consult with your personal financial or tax advisor to help you decide whether the tax credit or the DCSA Program is more favorable for you. 15

16 When Participation Ends Termination of Participation Your participation in the DCSA Program will end on the earliest of the following: the date the Company terminates the Program; the date your employment with the Company ends; the date you cease to be an eligible Associate; or the date your election to participate terminates. Other This Plan prohibits fraud, deception, and intentional misrepresentations of material fact in the use of Plan services. Your coverage and the coverage of your dependents may be terminated or rescinded if you engage in such acts or knowingly permit such acts by another. The Company reserves the right to revise or terminate the DCSA Program, in whole or in part, at any time and without prior notice to you. The Company also may revise the Program as necessary to comply with law. 16

17 Glossary Many terms and phrases are defined throughout this booklet. Following is a list of terms and phrases that have not been defined elsewhere in this booklet. In all cases, terms and phrases that carry a specific definition have been capitalized. Annual Pledge The total dollar amount pledged by the participant for the entire Plan Year. If the participant is newly hired or experiences a change in status during the Plan Year, the Annual Pledge is the total dollar amount pledged from the time of enrollment until the end of the Plan Year. Annual Pledge Minimum The minimum dollar amount that can be pledged for a Plan Year. For this Plan, the Annual Pledge Minimum is $120. Annual Pledge Maximum The maximum dollar amount that can be pledged for a Plan Year. For this Plan, the Annual Pledge Maximum is $5,000. Associate Any person employed by the Company. The term Associate shall not include persons who are independent contractors, non-employee members of the CarMax Board of Directors, or who are considered to be self-employed individuals under IRS Code Section 401(C). Company CarMax, Inc., its parent and subsidiary corporations, and any successor by merger, purchase, consolidation or otherwise. Eligibility Date The date on which you become eligible to join the Plan. Reimbursement Request A claim that the participant files when an eligible expense is incurred. The claim is filed by completing and submitting a Request for Reimbursement Form along with all applicable receipts. 17