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Department of Human Resources
INFORMATION ON FLEXIBLE SPENDING
Effective Date, Eligibility, and Change in Elections
General Rules for Spending Accounts
Use-It-or-Lose-It Rule for Spending Accounts
Health Care Spending Account
Dependant Care Spending Account
Effect of the Plan on Other Benefits
Claims Information
The health and welfare of the University's employees and their families are
important. Safeguarding both is frequently a difficult and expensive task.
Single parents as well as families in which both spouses work outside the
home often have significant dependent care expenses which are not covered
by insurance plans.
To assist with these expenses, the University offers you the opportunity
to participate in the Flexible Spending Account Plans for Dependent Care and
Health Care. These spending account plans allow you to pay for those dependent
and/or health care expenses with before-tax dollars.
Under a spending account arrangement, you make contributions to the account
from your salary each pay period before payroll taxes are computed. You are
then reimbursed for eligible expenses from your Flexible Spending Account(s)
as you present your claims for payment.
This booklet has been written with as few technical terms as possible, so
that you will be aware of your rights and benefits. Every effort has been
made to make the booklet as complete and accurate as possible. However, if
any conflict should arise between this booklet and the Plans, the terms of
the Plans will govern.
Human Resources will be happy to supply you with any additional information
so that you will have a complete understanding of the benefits to which you
are entitled.
The Dependent Care and Health Care Spending Account Plans took effect January
01, 1989. All subsequent plan years will be the 12-month period beginning
on the January 01 plan anniversary.
All employees hired after January 1, 1989 will be eligible in conjunction with
their eligibility date for other employee benefits (first 31 days of employment).
Employees may also enroll during the annual open enrollment period for the
upcoming calendar year, (effective January 01), and employees who wish to
continue this benefit from one plan year to the next must re-enroll during
each annual open enrollment period.
To establish your spending account, you must make an election by completing
the election form and submitting it to Human Resources by the date you become
eligible for the plan. If you do not complete the election form on a timely
basis, you will be deemed to have elected not to make any salary reduction
contributions to pay for eligible dependent and/or health care expenses you
may incur during the plan year.
You may only change your elections once a year, prior to the plan anniversary
date, unless there is a change in your family status (i.e., marriage, divorce,
or legal separation, death or disability of a dependent, birth or adoption
of child, change in employment status of spouse). If you experience a change
in family status, you will be permitted to change your benefit election to
accommodate that change, within 31 days of the date of the change. The change
must be consistent with the change in family status.
When you are first eligible to participate in the University's Flexible Spending
Account Plans, and prior to each plan year, you may elect to contribute a
portion of your salary to your individual spending account(s) to pay for eligible
dependent care and/or health care costs you will incur during the plan year.
Your contribution is made on a salary reduction (i.e., before-tax) basis.
Your contributions for a plan year to the Spending Account can only be used
to reimburse eligible health care or dependent care expenses which you incur
for yourself and/or eligible members of your family during that plan year.
Expenses that you incur in excess of your account balance at the end of the
plan year cannot be reimbursed nor carried forward for reimbursement in a
subsequent plan year.
The IRS has imposed several rules regarding the use of spending accounts. The most significant rule is the USE-IT-OR-LOSE-IT Rule. Unused funds at the end of the plan year must be forfeited and cannot be returned in any manner. Because of this rule, it is VERY IMPORTANT that employees estimate their eligible expenses very carefully and conservatively. Flexible Spending Account expenses must be incurred during the period of coverage. If employment should terminate during the plan year, all contributions to the spending account will cease, effective with the date of termination. The employee will not be eligible for reimbursement for any expense incurred after termination of employment of such expenses. For expenses incurred prior to employment termination and during the coverage period, the flex plans provide for a 90 day (3-month) run-out period following termination, during which the individual is permitted to submit claims for reimbursement of such expenses.
Plan records are maintained on a twelve-month period of time. This is known as the Plan Year. The Plan Year begins on January 1 and ends on December 31.
The Post Plan Year Extension Period (also commonly called the “grace period”) during which expenses may be incurred from your Health Care Flexible Spending Arrangement and your Dependent Care Flexible Spending Arrangement shall be the 75 day period immediately following the end of each Plan Year.
There will be a 90 day (3-month) grace period following the close of the plan year for active employees to deplete accounts. However, employees are encouraged to request reimbursement for these expenses prior to the close of the plan year.
There is a limit of $5,000 of salary per plan year that can be contributed
to the Health Care Spending Account. The annual amount you decide to contribute
will be deducted as a fixed amount from each paycheck and is not subject to
Federal, State or FICA tax. The maximum amount that you can contribute to
the Health Care Spending Account Plan per pay period is:
- $416.66 per month for employees on a 12 month contract
- $500.00 per month for employees on a 10 month contract
- $208.34 for each of 24 pay periods for hourly and salaried employees paid
bi-weekly
In general, Health Care expenses for you and your dependents are eligible
for reimbursement from your Flexible Spending Account if they:
Qualify as a medical expense for Federal income tax purposes under Section
213 of the Tax Code.
Have not been and will not be reimbursed by the University's medical coverage
insurance plan or by another health insurance plan.
Have not been and will not be deducted on your income tax return.
Eligible reimbursable expenses under this plan include but are not limited
to:
- Unreimbursed medical expenses (including deductibles and co-payments) for
hospital, physician, prescription drug, dental and vision care.
- Uncovered health services such as prescription glasses, hearing aids and
orthodontia.
- Long term rehabilitation services (alcoholism and drug abuse)
If you are married and file a joint return, file as head of household, or
as single, you may elect to contribute up to $5,000 per plan year to your
dependent care spending account. The limit is $2,500 if you are married and
file a separate tax return. These limits are imposed by the Tax Reform Act
of 1986.
Your contribution is deducted in equal amounts from each of your paychecks.
This means that the maximum amount that you can contribute to the Dependent
Care Spending Account Plan per pay period is:
- $416.66 per month for employees on a 12 month contract
- $500.00 per month for employees on a 10 month contract
- $208.34 for each of 24 pay periods for hourly and salaried employees paid
bi-weekly
Additional Employment and Earnings Limitations
If you are married, generally both you and your spouse must be employed in
order to use this plan to reimburse your eligible dependent care expenses.
However, during any month in which your spouse is a full-time student at
an educational institution or is physically or mentally unable to take care
of himself/herself, your spouse will be deemed to have a monthly salary of
$200 if there is one dependent, or $400 if there are at least two dependents
who qualify for assistance under the Dependent Care Flexible Spending Account
plan.
The amount by which you may reduce your salary to make pre-tax contributions
for dependent care expenses is limited to the lesser of your earned income
or the earned income of your spouse.
If you are married, generally both you and your spouse must be employed in
order to use this plan to reimburse your eligible dependent care expenses.
However, during any month in which your spouse is a full-time student at
an educational institution or is physically or mentally unable to take care
of himself or herself, your spouse will be deemed to have a monthly salary
of $200 if there is one dependent, or $400 if there are at least two dependents
who qualify for assistance under the Dependent Care Flexible Spending Account
Plan.
The amount by which you may reduce your salary to make pretax contributions
for dependent care expenses is limited to the lesser of your
earned income or the earned income of your spouse.
Eligible Dependent Care Expenses are work-related expenses incurred for qualifying
individuals (see next subsection). These expenses include housekeeper (when
babysitting services are included), babysitter, licensed day care center costs,
and schooling costs for children not yet in the first grade. Costs which are
NOT eligible include transportation and overnight camping costs and schooling
costs for children in the first grade or above.
Individuals who qualify as dependents for the purpose of this plan are your
dependent children under age 13 and any other individuals who reside with
you, and who rely on you for more than half of their support, or are physically
or mentally unable to care for themselves.
If you are divorced or legally separated, you can generally have your child's
Dependent Care Expenses reimbursed if you are the custodial parent, i.e.,
if you have custody of the child for a longer period of time during the plan
year than the other parent.
The following exceptions override the custodial parent rule and permit you,
as a non-custodial parent, to have your child's dependent care expenses eligible
for the Flexible Spending Account:
- The custodial parent formally releases claim to the Federal income tax dependent
exemption for the tax year
- You provide over half of the support of the child under a multiple agreement
- You are entitled to the dependent exemption for Federal income tax as a
result of an agreement executed prior to 1985.
Alternative Source of Dependent Care Assistance
Section 129 of the Internal Revenue Code also allows a Dependent Care Income
Tax Credit which may apply to your dependent care costs. You cannot use the
same dependent care expenses for both the Spending Account Plan and the Tax
Credit. And, the dollar limit available under the Tax Credit is reduced dollar
for dollar by the amount used under the Spending Account. You will want
to consider carefully which option will give you the greater tax savings.
Effective in l989, as a condition to the Dependent Care credit or exclusion,
a taxpayer must provide the name, address, and taxpayer identification number
of the dependent care provider.
The salary that you contribute to a Health Care Flexible Spending account is not subject to Federal , Georgia , and FICA (social security) taxes, and will not be included as earnings on your W-2 form. The salary that you contribute to a Dependent Care Flexible Spending account appears on your W-2 form.
Certain benefits provided by the University (i.e., Teachers Retirement, Group Life Insurance benefits, Long Term Disability) are determined on the basis of your salary. Contributions to a spending account will not reduce your benefits that you will receive from any of the above mentioned programs.
To enable you to use your spending account for expenses incurred up to the end of the plan year, you may continue to submit claims for thee months following the close of the plan year. Those claims must be for expenses incurred during the actual plan year.
Effective January 1, 2004, the University entered into a contract with AFLAC
to administer the processing of Flexible Spending Account Claims. Participants
must submit a completed form and supporting documentation directly to AFLAC
when requesting reimbursement from their health care spending account plan
and/or their dependent care spending account plan.
The AFLAC claim form can be found at the following web site address:
http://www.bf.westga.edu/hrpay/forms/aflac.flexclaim.pdf Blank forms are
also available in the University's Human Resources Office. Completed claim
forms and supporting documentation should be sent directly to AFLAC.
Forms can be faxed to AFLAC at (877) 353-9256
OR
Forms can be mailed to: AFLAC Administrative Services/FLEX ONE
1932 Wynnton Road
Columbus, GA 31999-9950
Payment (Reimbursement) Methods
AFLAC offers two payment methods:
1) direct deposit into an account of your choice at your financial institution;
if you choose to have your funds direct deposited, you must complete a direct
deposit authorization form for AFLAC.
OR
2) you can elect to have a paper check mailed to your home address; if you
choose to
receive a paper check, it is not necessary for you to do anything more than
submit the completed claim form to AFLAC when requesting reimbursement.
Customer Service for AFLAC can be reached at (877) 353-9487.
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