WHAT IS A SECTION 125 FLEXIBLE BENEFIT PLAN? A Section 125 Flexible Benefit Plan allows you, the employee, to spend benefit dollars for benefits that you choose to meet your needs. The benefits from which you may choose are listed later in this booklet. The benefits that you elect under the Plan are paid for with benefit dollars made available to you by your employer or through a salary reduction agreement with your employer. Salary reduction means that you are able to use "pre-tax" dollars to pay for certain benefits that you may have previously paid for with "after-tax" dollars. HOW CAN THIS PLAN HELP YOU? By implementing this Plan, your employer is helping you reduce your taxes and increase your spendable income. The cost saving advantage of the Plan is simple. Any benefit costs or insurance premiums you pay under the plan are paid on a pre-tax basis. The example below illustrates the advantage of the Section 125 Plan in comparison with a situation without the benefits of a Plan. WITHOUT SECTION 125 WITH SECTION 125 Average Monthly Salary $2,000 Less Estimated Federal Withholding (20%) -400 $1,600 Less Insurance Premium(s) -200 Net Take-Home Pay $1,400 Less Out-of-Pocket "Flex" Expenses -50 Spendable Income $1,350 Average Monthly Salary $2,000 Less Qualified Insurance Premium(s) -200 Less Out-of-Pocket "Flex" Expenses -50 Taxable Income $1,750 Less Estimated Federal Withholding (20%) -350 Net Take-Home Pay/Spendable $1,400 Income The bottom line is that you may have more dollars available to you for the purchase of other benefits you may need or available to you as increased take-home pay.
WHAT BENEFITS ARE AVAILABLE? The following benefits are available to you under the Plan: Insurance Benefits: Cancer, Heart/Stroke, Accident, SHOP, Vision, Dental, Disability* (w/spousal rider), Critical Illness,* Long Term Care* and Life* * coverages available outside Section 125 only Expense Reimbursement Accounts: Medical Expense Reimbursement Dependent Care Expense Reimbursement * If maternity benefits are provided: Group health plans and health insurance issuers offering group insurance coverage generally, under federal law, may not restrict benefits for any hospital length of stay in connection with childbirth for the mother or newborn child to less than 48 hours following a normal vaginal delivery, or less than 96 hours following a caesarian section, or require that a provider obtain authorization from the plan or the insurance issuer for prescribing a length of stay not in excess of the above periods. WHO CAN PARTICIPATE IN THE PLAN? All employees of Camden County Schools who normally work at least 20 hours per week or are regular part-time status who meet eligibility requirements will be able to participate in the Plan. If you are an existing employee, you must sign an election form for the next plan year during the annual enrollment period. New employees are eligible immediately. HOW MUCH DOES IT COST TO PARTICIPATE? There is no charge to participate in the Cafeteria Plan!
HOW DO I ENROLL IN THE PLAN? During the enrollment period, there will be group meetings scheduled for all employees to attend. These meetings will allow you the opportunity to hear a presentation concerning how the Plan works and information on the benefits available. Following the meeting, you will have the opportunity to visit with a representative from First Financial Group of America on a one-on-one basis concerning your individual needs. At this meeting, you will again have the opportunity to ask questions and you will complete an election form. This election form must be completed and signed by each employee, whether or not you wish to elect to participate in the benefit portion of the Plan. MAY I CHANGE MY BENEFIT ELECTION? The benefit election made during the enrollment period will remain in effect for the plan year. The plan year will be from January 1, 2009 to December 31, 2009. If you wish to change your benefit election, you must effect the change prior to the beginning of the next plan year. You may, however, change your benefit election during the plan year if you experience a change in status which affects your need for a benefit. Any election change must be consistent with the change in status that has occurred. The following circumstances are examples of events that qualify as a change in status: Marriage, divorce, or legal separation; Birth or adoption of a child; Death of a dependent child or spouse; A change in the employment status of the employee or spouse, such as the termination or commencement of employment, or going from part-time to full-time or full-time to part-time employment, which affects the eligibility for that benefit. You may also revoke any election you made for the period during which you are absent from work for a family medical leave covered by the federal Family and Medical Leave Act (FMLA). You may reinstate your election of group medical benefits when you return from the FMLA leave. However, you may not reinstate a revoked election as to the non-health insurance benefits until the next regular enrollment period.
CAN I STAY IN THE PLAN IF I AM ABSENT ON A FAMILY MEDICAL LEAVE? If you are absent from work on a leave of absence covered by the Family Medical Leave Act (FMLA) for periods totaling 12 weeks during the plan year, you are entitled to maintain the coverage you have under the Plan during your absence. Of course, you must pay the premiums for the coverage during your absence using one of the following methods: Prepayment: Under the prepayment option, you may (at your option) increase your salary reduction in an amount sufficient to cover the premiums that will come due during the FMLA leave. Pay-as-you-go: With the pay-as-you-go option, you continue to pay premiums on a regular basis through the FMLA leave. If you continue to receive your salary while you are gone, the premiums will be paid with pre-tax money as if you had not taken the leave. On the other hand, if your FMLA leave is unpaid and you choose this option, you will have to reimburse the Plan at regular intervals from your after-tax funds for the premiums that come due during the leave. The language above regarding the two payment methods assumes that both the prepayment and the pay-as-you-go methods are offered under the Plan. PREMIUM CONVERSION The following insurance products may be purchased under the Section 125 Flexible Benefit Plan with the premiums paid on a pre-tax basis: Cancer, Heart/Stroke, Accident, SHOP, Critical Illness, Vision, and Dental Enrolling in any of these benefits on the election form does not enroll you in the insurance product itself. In most cases, an insurance application to the company issuing the insurance product must also be completed. EXPENSE REIMBURSEMENT ACCOUNTS The following expense reimbursement accounts are available under the Section 125 Flexible Benefit Plan with your contributions to the account paid on a pre-tax basis: Dependent Care Expense Reimbursement Medical Expense Reimbursement
EXPENSE REIMBURSEMENT ACCOUNTS If available as a plan benefit option, expense reimbursement accounts allow you to establish an account to reimburse certain types of expenses on a tax exempt basis. There are two types of reimbursement accounts which may be elected. The first is the Medical Expense Reimbursement Account to reimburse uninsured out-of-pocket medical expenses, and the second is the Dependent Care Expense Reimbursement Account to reimburse dependent day care expenses. HOW DO THE REIMBURSEMENT ACCOUNTS WORK? Each month, pre-tax payments are made to an account set up in your name. As one of your Section 125 Flexible Benefit Plan elections, you can specify the payment amount to be set aside on a tax-free basis for one or both of the reimbursement accounts. As you incur qualified medical expenses or dependent day care expenses, you can submit a voucher form for reimbursement from the proper account. HOW DO I GET REIMBURSED FOR MY QUALIFIED EXPENSES? Each month in which you incur an expense, you may submit a voucher form for reimbursement. This voucher form must be accompanied by your original receipts or, in the case of a dependent day care expense, a dependent care provider acknowledgment form. These forms will be provided to you. The voucher will be processed and you will be sent a reimbursement check for your expense(s). The medical expense reimbursement check will be for the expenses claimed up to the maximum benefit amount you elected for the year less expenses previously reimbursed. The dependent care expense check will be for the expense you claimed up to the amount you have in your account. WHAT HAPPENS IF MY EXPENSES ARE LESS THAN THE AMOUNT SET ASIDE? Any expense dollars not used for expenses are forfeited. This is known as the "use it or lose it" provision of Section 125. It is very important that you be conservative and accurate when estimating your expenses for the plan year.
IMPORTANT GUIDELINES FOR ENROLLMENT IN REIMBURSEMENT ACCOUNTS 1. Be sure that the amount set aside is conservative amounts not used for qualified expenses cannot be carried over or returned to you. 2. You cannot be reimbursed for these expenses from any other source. 3. All expenses to be reimbursed must be incurred in the plan year in which your contributions are made. 4. Expenses reimbursed under the Plan may not be used when calculating your medical expense deduction or the dependent care tax credit. 5. You have a 90-day grace period at the end of the plan year to request reimbursement of expenses you incurred during the plan year. 6. You should consult with your tax advisor concerning participation in the reimbursement accounts. MEDICAL EXPENSE REIMBURSEMENT ACCOUNTS The Medical Expense Reimbursement Account can benefit you if you have any predictable out-ofpocket medical, dental or vision care expenses. Only expenses incurred for you or your dependents during the plan year may be reimbursed. For the Medical Expense Reimbursement Account, you will only be allowed to change your benefit election due to termination of your employment. HOW MUCH IS AVAILABLE FOR REIMBURSEMENT? The total amount of a qualified expense is available for reimbursement upon receipt of a voucher and original bill or receipt. The amount of the reimbursement, however, will not exceed the total contribution for the plan year less any reimbursements paid to date. Total reimbursements for the plan year will not exceed the contribution amount for the plan year. IS THERE A CONTRIBUTION LIMIT? Maximum amount available under the Medical Expense Reimbursement Account is $3,000 per plan year.
MEDICAL EXPENSE REIMBURSEMENT WHAT TYPES OF EXPENSES ARE ELIGIBLE? Examples of eligible medical expenses may include, but are not limited to: Acupuncture Alcohol and Drug Rehabilitation Expenses (inpatient treatment only) Ambulance Anesthetist Artificial limbs and teeth Blood pressure monitor Certain corrective surgery Contraceptives Chiropractor Dental treatment Diabetic supplies Eye exam, prescription eyeglasses, and contact lenses, contact lens solution and enzyme cleaners Gynecologist Hearing aids and batteries Hospital and skilled nursing facility Laboratory fees Laser eye surgery Massage for medical reasons Medical examinations Medical monitoring and testing devices (ex. blood pressure and glucose monitors) Obstetrics Orthodontia expenses as treatment is provided* Over the counter drugs and medications for treatment of a medical condition (see next page) Over the counter items for smoking cessation Physical therapy provided by licensed therapist Physician Prescription drugs Rental or purchase of portable medical equipment Stop smoking program Support or corrective devices Transportation expenses relative to medical care, including medical mileage at the rate allowed by the tax code Weight Loss Program for obesity** (excludes food, exercise equipment and exercise classes) X-rays * Orthodontia claims cannot be accepted for the entire contracted amount. Claims will be accepted for the initial down payment usually associated with the appliances. Monthly payments will also be accepted as the charge for the medical services rendered for that month. ** You will be required to submit a Dr s Prescription outlining the diagnosis and medical necessity in order to claim these types of expenses. Examples of ineligible and/or excluded medical expenses may include, but are not limited to: Capital expenditures Cosmetic procedures Dancing or swimming lessons Exercise equipment and exercise classes Expenses not incurred during period of coverage Expenses reimbursed under any other health plan Hair loss items and/or treatment Health club dues Herbs/vitamins/supplements Health insurance premiums Hot tubs Marriage counseling Massage for non-medical reasons Mattresses Personal trainers Swimming pools Teeth whitening Vacations Vacuum cleaners
Weight loss expenses for non-medical reasons
Examples of eligible over the counter medications may include, but are not limited to: Antacids Allergy medication Anti-diarrheal medication, laxatives Bandaids, bandages, gauze pads, first aid kits Bug bite medication Calamine lotion Cough drops, throat lozenges, sinus medication, nasal sinus spray Cold medication, pain reliever Cold/hot packs for injuries, crutches Contact lens solution, cleaners Carpal tunnel wrist supports Condoms, spermicidal foam Diaper rash ointment Eye products (such as Visine or saline wash) First aid creams and ointments, liquid adhesives, topical ointments Glucosamine/chondroitin for arthritis or other medical condition (requires doctor s statement) Hemorrhoids creams Incontinence supplies Joint/muscle pain medication Lactose intolerance pills Menstrual cycle products for pain and cramp relief Motion sickness pills Nicotine gum or patches for stop-smoking purposes Nasal strips for snoring Orthopedic shoe inserts Over the counter hormone therapy and treatment for menopausal symptoms (hotflashes, night sweats, etc. requires doctor s statement) Pedialyte for ill child s dehydration Pregnancy test kits Prenatal vitamins during pregnancy (requires doctor s statement) Reading glasses Rubbing alcohol Sleeping aids St John s Wort for depression (requires a doctor s statement) Suppositories Sunburn cream or ointment Sunscreen Supplements, vitamins or herbal treatments to treat medical condition (requires doctor s statement) Thermometers (ear or mouth) Wart remover treatments Weight loss drugs to treat medical condition or obesity (requires doctor s statement) Examples of ineligible over the counter medications may include, but are not limited to: Chapped lip treatments Face creams, moisturizers, suntan lotions Medicated shampoos and soaps (unless prescribed by a doctor) Toiletries Toothbrushes, toothpaste Vitamins and supplements for maintaining general good health
DEPENDENT CARE EXPENSE REIMBURSEMENT If you incur dependent day care expenses so that you and your spouse can work, the dependent day care expense reimbursement portion of the plan will allow you to submit dependent day care expenses reimbursement for a qualifying dependent. Remember that to be eligible for this program, your spouse (if you are married) must work, go to school full time, or must be incapable of self-care. A qualifying dependent lives in your home and is: WHO IS A QUALIFIED DEPENDENT? 1. Your dependent under age 13 for whom you may claim an exemption deduction, or for whom you are the custodial parent, if separated or divorced; 2. Your dependent who is physically or mentally not able to care for himself or herself, and spends at least 8 hours daily in your home; or 3. Your spouse who is physically or mentally not able to care for himself or herself, and spends at least 8 hours daily in your home. WHAT ARE ELIGIBLE EXPENSES? You may be reimbursed for dependent care for a qualified dependent provided either inside or outside of your home. If provided outside the home, the dependent care center or provider must comply with all federal, state and local regulations, if applicable. In addition, the center or provider must be willing to complete the dependent care provider acknowledgment form and to provide the name, address and social security number or tax identification number of the care provider. Expenses may not be reimbursed if care is provided by one of the following: 1. Someone you may claim as a dependent for federal income tax purposes; 2. Your child unless the child is age 19 or older by the end of the year.
WHAT IS THE MAXIMUM I CAN CONTRIBUTE? In most cases, you may contribute up to $5,000 per year; however, that amount may be reduced if: 1. You are married and file a separate tax return, the maximum contribution is $2,500. 2. You or your spouse earns less than $5,000 a year, the maximum contribution is equal to the lesser income amount. WHAT IS AVAILABLE FOR REIMBURSEMENT? Upon receipt of the voucher and acknowledgement form, you will be reimbursed for the expense you claimed up to the amount you have in your account. If your voucher is for an amount in excess of the amount in your account, the balance of the expense will be carried forward to future months as additional payments are received for your account. TAX CREDIT ALTERNATIVE You should be aware that you may be able to take a federal tax credit on the amount you pay for dependent care expenses instead of participating in the dependent care expense reimbursement account. You cannot claim the tax credit for expenses that have been reimbursed through the plan. Please consult you tax advisor to determine which plan may be most advantageous to you. IMPORTANT TAX INFORMATION Regardless of whether you participate in the dependent day care plan under Section 125 or claim the credit on you income tax, you must provide the IRS with the name, address and taxpayer identification number (TIN) of your dependent day care provider(s) by completing Schedule 2 of Form 1040A or Form 2441 and attaching it to you annual income tax return. Failure to provide this information to the IRS could result in loss of the pre-tax exemption for your dependent day care expenses.
First Financial Group of America EMPLOYEE EXPENSE WORKSHEET EMPLOYER: NAME OF EMPLOYEE: SOCIAL SECURITY #: DATE OF BIRTH: MARITAL STATUS: NUMBER OF DEPENDENTS: ESTIMATED USE ONLY I.OUT-OF-POCKET MEDICAL EXPENSES: ANNUAL COST ELECTION Type of Expense $ Health insurance Deductibles Doctor Office Visits Over the Counter Medications Physicals Prescription Drugs Dental Costs (check-ups, cleaning, fillings) Orthodontia Costs (braces, exams, etc.) Vision & Eye Care (glasses, contacts) Surgery Other Health Related Expenses Specify TOTAL AVERAGE MONTHLY EXPENSE (divide total by 12 or number of months being paid if less than 12) II. DEPENDENT OR CHILD CARE EXPENSES: Child Care Expenses $ Other Employment Related DDC Costs TOTAL: AVERAGE MONTHLY EXPENSE (divide total by 12 or number of months being paid if less than 12) This is a worksheet only and does not obligate you in any way. If you decide to participate in either of the expense reimbursement accounts or in both of them, there may be a monthly administration fee to be payroll deducted. Remember that you should review you tax situation carefully as to the tax advantage of the dependent care tax credit compared with participation in the dependent care expense reimbursement portion of the Section 125 Flexible Benefit Plan.