Flexible Spending Account

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1 Plan Year Special points of interest: Plan year runs July 1, 2011 through June 30, 2012 Maximum Healthcare election amount $3,000 Maximum Dependent Daycare election amount $5,000 or $2,500 if married and filing separate Charges must be incurred July 1, 2011 June 30, Claims for these charges submitted no later than September 30, 2012 Flexible Spending Account Navajo County Schools Consortium What is a Flexible Spending Account (FSA)? Under Section 125 of the IRS code, your employer sponsors a pre-tax cafeteria plan known as a Flexible Spending Account. This plan provides you with a convenient way to pay for certain expenses with pre-tax dollars savings from FICA, federal, and sometimes even state taxes. Through the plan, you set aside a portion of your earnings to pay for medical/dental/ vision/prescription expenses such as copays that are not covered by insurance. The plan also allows for earned income to be set aside for child daycare expenses. Dependent Daycare eligible expenses are for children under the age of 13 and dependents of any age who are physically or mentally unable to care for themselves. By enrolling in this plan, you save money on child daycare expenses incurred so that you (and your spouse, if married) can work, look for work, or attend school on a full-time basis. The 125 code specifies the Use-it or Lose-it rule that all contributions to a Flexible Spending Account must be used during the plan year or forfeited. Therefore, the decision as to how much will be deposited into your FSA should be made carefully. How much can I save? With FSA Plan Without FSA Plan Annual Pay $30,000 $30,000 Pre-tax contribution to FSA Remaining Taxable Income Federal, State, and Social Security taxes* After-tax dollars spent on eligible expenses $5,400 $0 $24,600 $30,000 $6,802 $8,295 $0 $5,400 Net spendable income $17,798 $16,305 Tax Savings $1493 $0 *Assumes 15% federal tax, 5% state tax and 7.65% Social Security tax Take the test? If you answer Yes to any question below you will increase your take-home pay with a FSA account. Don t forget you and your spouse or dependent children expenses are eligible. Does your insurance plan have co-pays, deductibles or co-insurance ( % of bill you owe after insurance pays)? Do you or any family member take maintenance medications (hypertension, cholesterol, diabetes)? Will you or any family member have dental or orthodontia work that will result in out-of-pocket expenses? Do you wear prescriptions glasses or want LASIK? Do you pay for childcare so that you can work?

2 Page 2 Flexible Spending Account What else should I know about Flexible Spending Accounts? There are some important factors that should be considered before making your decision. Enrollment for the plan is available during your employer s open enrollment period or when you first become eligible for benefits. Your election amount will remain in effect for the plan year, unless you experience a qualified change in status. Please refer to your Employee Benefits Plan Document for the qualifying events. Qualified expenses must be incurred during your current plan year, regardless of when final payment is made. If you terminate employment for any reason, your Flexible Spending Account will terminate on the last day of the month in which you were employed. You will only be able to seek reimbursement for expenses incurred through the last day of the month in which you were employed, unless FSA COBRA is elected.* Claims incurred in a Plan Year may be reimbursed from that Plan Year s funds, if submitted no later than 90 days in the subsequent year. *Please contact AEI for additional information regarding FSA COBRA / / aeifsa@meritain.com What expenses qualify under a Dependent Daycare Account? Eligible expenses are defined as followed: The expense must be employment related. Expense may not exceed the lesser of you or your spouse s income (Note: if your spouse is disabled or a full-time student, his/her salary will be $200 per month if you have one child or $400 per month if you have two or more children. The person providing the dependent daycare is not the employee, the spouse s child or other person who could be claimed as a dependent. Typical expenses include payments to the person providing dependent daycare services in the home or nursery schools and daycare centers so that the responsible individual may be employed. Dependent Daycare accounts will only have the amount available that has been deducted from your paychecks to date. Expenses not allowed: Registration Fees Overnight Camp Educational Classes (i.e. sports camp, horseback riding, swimming lessons) Kindergarten or Private School FAX, or MAIL your claims: Fax: aeifsa@meritain.com Mail: AEI a Meritain Health Company 5810 West Beverly Lane Glendale AZ How do I submit a claim for reimbursement? All requests for reimbursement of eligible expenses must be on a Flexible Spending Account Reimbursement Request Form. You can find forms online at go to the Members Tab and scroll down to Claim Forms. Your documentation must be an Explanation of Benefits (EOB) or an itemized receipt/ statement with the following information on it: Name of Provider Date Service(s) rendered Description of Service provided Name of the Person receiving the medical care and the charged amount Insurance payment and adjustment. Dependent Daycare must include: Name of the Provider Social Security Number or Tax Identification Number Date(s) Service was provided Name of the Child or Adult receiving the care Amount charged for the Service

3 Page 3 Access your Flexible Spending Account and view your balance, submit claims, sign up for direct deposit Top tool bar click on Members/RepayMe First time signing in: Login ID: your SS# Password: last 4 digits of SS# Log-in Method : Social Security # FSA Calculator so you can see the savings! You may use the FSA calculator located on AEI s website to see how participating in your employer s Section 125 Cafeteria Plan can help you pay less tax, and increase your net take home pay.

4 Page 4 Flexible Spending Account What is the FSA Benefits Card? The FSA Benefits Card is similar to a credit card where NO PIN is required. Credit is selected at the time of purchase and your signature will be required. The FSA Benefits Card will be accepted at medical/dental/vision facilities. No cash advance is available on the FSA Benefits Card. If a different method of payment is used, you may also submit a traditional manual claim for reimbursement. Cards are effective at merchants and service providers with specific merchant category codes (MCC) related to Healthcare (i.e. doctors, dentists, vision care providers and hospitals). Please be aware that there is a small fee of $5.00 for a reissue of a lost or stolen card. You may also request a card for your spouse or adult age eligible dependents for a $5.00 fee. Keep all receipts and EOB s for auditing purposes What is IIAS? The IRS has implemented an intelligent system known as Inventory Information Approval System (IIAS) for FSA Benefits Card purchases. This system will identify all eligible Healthcare items at the point of sale and in some cases, this will eliminate the need to submit receipts as back-up documentation to AEI. Many commonly used merchants have adopted this new system, which has made it easier and efficiently allows you to pay for your eligible items. To view a current list of participating merchants, go to Walgreen s is a participating pharmacy that is not listed on the sig-is website. You are responsible for keeping all receipts for AEI auditing and IRS accountability purposes. Any payment transaction that is not your standard co-pay assigned by your insurance plan, will be subject to auditing and backup documentation will be requested to substantiate the transaction/purchase. Card to be used during your plan year. When can I use my FSA Benefits Card? The FSA Benefits Card may be used for services rendered within your current plan year. If your plan year for your Flexible Spending Account with your employer begins January 1st and ends December 31st: You may use your FSA Benefits Card for services rendered in this time period (January 1 December 31). You have until March 31st to submit claims for reimbursement. If your plan year for your Flexible Spending Account with your employer begins July 1st and ends June 30th: You may use your FSA Benefits Card for services rendered in this time period (July 1 June 30). You have until September 30th to submit claims for reimbursement.

5 Page 5 Important reminder about your FSA Benefits Card It is important that each time you use your FSA Benefits Card you keep all supporting documentation from the provider. Purchases that are not the standard charge based on your schedule of benefits will require additional/supporting documentation such as an Explanation of Benefits (EOB). AEI will send you notification if this information is needed to adjudicate your transaction(s). If proper documentation is not received for a FSA Benefits Card transaction in a timely manner when requested, the card will be temporarily inactive until the requested documentation has been received and reviewed. Please Note: Check carbons, cancelled checks, or credit card slips are not considered supporting documentation for the FSA Benefits Card transactions or manual claim reimbursement. Why would my FSA Benefits Card decline? This could happen for several different reasons. The card could decline due to low funds in the account. The merchant s credit/debit card terminal may not be an approved Merchant Category Code (MCC), which allows transaction to be recognized as an eligible medical transaction. If the amount due is over the available balance in your account, your FSA Benefits Card transaction will be for the remaining amount in your account and you will be required to use a different payment method for the balance of your purchase or service. The card may also be temporarily inactive due to previous attempts to obtain documentation to substantiate a prior transaction. Why do I need to refund my account? If you use your FSA Benefits Card for an ineligible item(s), per the IRS guidelines, it is your responsibility to refund your account. For example, you paid your dentist the fullbilled amount of $ for services rendered with your FSA Benefits Card. Then the claim is submitted to your dental insurance and payment is processed. After the insurance payment is processed, your out-of-pocket expense to the provider is only $100.00; the $ you overpaid with your FSA Benefits Card is not an eligible expense and must be refunded back to your account. This is why it is so important to allow all claims to go through the normal billing process before payment is made with your FSA Benefits Card.

6 Page 6 Flexible Spending Account Please note: Per the passing of the Health Care Reform, as of 01/01/2011, Over-the-Counter medications will require a doctor s prescription for reimbursement.

7 Page 7 Eligible Expenses cont. For over-the-counter medications purchased after 12/31/2010, a doctor s prescription is required along with an itemized receipt showing the name of the drug, the purchase date and the price. The over-the-counter receipt must clearly indicate the name of the item purchased. If the cash register receipt does not give the name of the item, a more detailed receipt from the merchant will be required. You may also copy the item label and submit along with your receipt and claim form. A completed and signed claim form is required with all reimbursement requests. You may obtain a claim form from your Human Resources Department or from our website at

8 AEI a Meritain Health Company 5810 West Beverly Lane Glendale, Arizona Phone: / Fax: aeifsa@meritain.com Your entire yearly Medical FSA election is available July 1, FSA Worksheet Use this worksheet to help you plan the amount of your Health Care Spending Account contribution. Review what you spent on health care in the previous year. Include estimated expenses for health care services to be rendered in the upcoming Plan Year that will not be reimbursed by your medical, dental or other benefit plans. Remember to include expenses for eligible spouse and children. MEDICAL EXPENSES: Estimated totals for JULY 2011 JUNE 2012 Health Plan Deductibles: $ Office Visit and Hospital Co-pays: $ Prescription Drug Co-pays: $ Routine Physicals (not covered by insurance): $ Hearing Aids: $ Other Eligible Expenses (over-the-counter medications i.e. aspirin, first aid, antacid, cold, cough etc.) These OTC items will require a doctor s prescription. $ DENTAL EXPENSES: Deductibles and Co-pays: $ Services not covered by Dental Insurance: $ Orthodontia (braces): $ Planned dental work (crowns, dentures): $ VISION CARE EXPENSES: Eye Examinations: $ Eyeglasses/Corrective contact lenses & solutions: $ TOTAL ESTIMATED OUT-OF-POCKET EXPENSES $ Eligible expenses for Dependent Care FSA allows you and your spouse to work, look for work, or attend school full time. These expenses can be used to offset non-medical daycare expenses for the following eligible dependents: Dependent children under 13 years of age Dependent Care Reimbursement A person of any age whom you claim as a dependent on your federal income tax return and who is mentally or physically incapable of caring for themselves Dependent care accounts will only have the amount available that has been deducted from your paychecks to date. Dependent Care Reimbursement Not to exceed $5,000 or $2,500 if married and filing separate tax returns $ week X 52= $