WHAT IS A FLEXIBLE SPENDING ACCOUNT PLAN?
As a result of the Revenue Act of 1978, Congress created Section 125 and added it to the Internal Revenue Code. A Flexible Spending Account Plan (also known as a form of Cafeteria Plan or a Section 125 Plan) is a plan that employs the principle of elective compensation for the advantage of the employee. This plan enables you, as an eligible employee, to elect that a portion of your income be used to pay for expenses you know you will incur during the plan year which runs January 1 through December 31. Internal Revenue Service now allows an extension of the plan year for the Medical Reimbursement Account through March 15th. Under the extension, expenses incurred during the "grace period" may be reimbursed from contributions made during the preceding year.

If you elect to participate, the amounts contributed to the plan are not subject to federal and state income tax or FICA and Medicare tax. Therefore, you recognize the tax savings for incurred expenses and an increase in your spendable income.

WHO IS ELIGIBLE?
Any individual employed by Auburn University who is eligible to receive medical benefits pursuant to the group medical plan sponsored by the University is eligible to participate in the plan. The effective date for the beginning of this election is the first payday after January 1 and it will continue through the end of the plan year. Newly hired employees have 30 days from their date of hire to elect to participate in the plan. The effective date of the initial enrollment for a newly hired employee will be the first payroll processing period after receipt of the election form by the plan administrator and will last until the end of the plan year. A new election form must be executed each year during November for the next plan year.

WHAT DOES IT COST TO PARTICIPATE?
Nothing! The University pays all fees.

HOW WILL THIS BENEFIT ME?
By having a specified amount of your gross income redirected to pay for eligible expenses during the plan year, you pay for these expenses with BEFORE-TAX dollars. Since your taxable income is lowered, you pay less federal and state income tax and FICA and Medicare tax. Therefore, your total take home pay (paycheck plus tax-free reimbursement) is more.

HOW DOES THE PLAN WORK?
OUTSIDE PREMIUM ACCOUNT:
You can elect to set aside a non-fixed amount each pay period to cover health insurance premiums paid outside of your employment. These may include personal health-related insurances such as cancer, dental, vision, accidental death, etc.(excluding life insurance premiums and those premiums which are payroll deducted by your spouse at his or her employment). The insurance must provide coverage for the employee and can include coverage for spouse and dependents. However, insurance premiums which cover only the employee's spouse are not eligible. As you incur premium expenses, you simply submit the premium notice in a BenefitElect reimbursement envelope and a check will be issued to you from your account.

MEDICAL REIMBURSEMENT ACCOUNT:
You can deposit up to a maximum of $5,000, per household, (less the amount set aside for the outside premium account) for the plan year into your own personal medical reimbursement account. You can use your account to pay (using Flex Convenience debit card) or reimburse you for eligible medical expenses incurred during the plan year which are not paid by your insurance plan. This includes co-payments, deductibles, and other non-covered expenses such as dental and vision services not reimbursed to you from any other medical, dental or vision care plan.
(See list for examples of tax deductible medical expenses).

DEPENDENT CARE:
You can deposit into your own personal dependent care account up to a maximum of $5,000 per plan year per household if your tax filing status is "married filing jointly" or "single head of household" or $2,500.00 per plan year if your tax filing status is "married filing separately". You can use this account to reimburse you for dependent care expenses if incurred solely for the purpose of allowing you or if you are married, you and your spouse to work outside the home. These expenses apply to dependents who are under the age of 13. If a dependent is 13 or older, he/she must be physically or mentally unable to care for him or herself for the expense to qualify as a deduction.

If you would like a fixed reimbursement check each pay period for which there is a flex deduction, attach a completed "Acknowledgment of Fixed Dependent Care Payments" form to the enrollment form. Then, on a quarterly basis, turn in a completed "Receipt of Dependent Care Payments" form to BenefitElect.

If the acknowledgment form is not submitted with the enrollment form, it will be considered to be a non-fixed election amount. To be reimbursed from a non-fixed account, you must submit a claim for the incurred expenses to BenefitElect and a check will be issued to you.

You may make payments to Dependent Care providers with the Flex Convenience debit card if accepted by the provider.

HOW WILL I KNOW THE STATUS OF MY ACCOUNT?
You will receive a quarterly statement as well as a statement with each reimbursement check. Should you participate in the Flex Convenience debit card capability you will be able to access your account information on a twenty four hours a day, seven days a week basis on an internet web site at www.fsa4me.com.

CAN I CHANGE MY CONTRIBUTIONS?
The amount of your contributions to the plan must be determined prior to the beginning of the plan year and cannot be changed unless you have a change in your family status (marriage, divorce, spouse employment change, childbirth, adoption, death of spouse or dependent), you terminate employment with the University or a change occurs in your dependent care payments which is beyond your control. If you have a change in family status during the plan year, you have 30 days in which to change your deduction. Please call the Payroll & Employee Benefits Office (844-4183) to request a Mid-Year change form.

HOW ARE CLAIMS PAID?
1. You may submit a claim for an eligible expense at any time during the plan year. You may submit a claim in the months of Jan, Feb. or March for the previous plan year. BenefitElect reimbursement forms are available in the Payroll and Employee Benefits Office for your use when submitting claims. You may fax your claim to 866-395-4543, email to customerservice@chappellebenefits.com or mail to BenefitElect, P.O. Box 59548, Birmingham, AL 35259.

With your claim, you must include suitable proof of payment. For medical expenses not reimbursed by insurance or for dependent care, the proof should be a receipt of your payment from the provider.
Please send copies of your receipts and retain the originals for your files.
Claims are submitted directly to BenefitElect, our plan Administrator. Reimbursements are made by check or direct deposit each pay period from the BenefitElect office in Birmingham, AL.

2. Each participant in the unreimbursed medical spending account and dependent care spending account will be issued a Flex Convenience debit card that may be used to charge expenses at participating providers at the time of service or purchase. When the Flex Convenience debit card is presented at a participating doctor's office, pharmacy, or child care provider, the co-pay amount or child care payment is transferred from your spending account immediately. With the exception of debit card co-pay amounts, receipts will be required to be submitted to BenefitElect within 10 days of incurring an expense on the medical reimbursement account. Submit to BenefitElect along with a DEBIT CARD RECEIPT TRANSMITTAL COVER SHEET. Use of the debit card is an additional optional convenience but is not a requirement.

WHAT HAPPENS IF I TERMINATE MY EMPLOYMENT?
If you terminate employment with the University and you still have money available in your flexible spending accounts, you may continue to access these monies for expenses incurred after you leave as long as you continue to make your designated contributions to the account (COBRA election). There are specific regulations governing continuation; therefore, arrangements must be made with the Payroll & Employee Benefits Office prior to termination to formalize these payments.

If you do not elect COBRA at termination and still have money available in your flexible spending accounts, you have ninety (90) days following your termination date to submit claims for reimbursement. These claims must cover plan year expenses incurred prior to your termination date.

OTHER IMPORTANT INFORMATION

• BE CONSERVATIVE! If you have any money left in your Outside Premium and/or Dependent Care accounts at the end of the year and have no outstanding claims for eligible expenses incurred during the plan year, that unreimbursed balance cannot be returned to you or carried over to the next year. This is known as the "Use It or Lose It" rule. However, the Medical Reimbursement Account has a "grace period" that begins on January 1st and runs through March 15th. Medical expenses incurred during this period may be reimbursed from contributions made during the preceding year. You will need to submit receipts for reimbursement. The debit card is not an option for prior year funds. Please use the FSA Grace Period Reimbursement Form.
  • Taxes do not apply to reimbursement checks you receive under the plan, therefore, you do not report these as income on your tax return. Any claim you make for reimbursement under the plan cannot also be claimed as a deduction or credit on your tax return.
  • The plan can provide significant tax savings to you; however, because social security taxes are reduced, you may have a slight reduction of social security benefits. This may be offset by simply investing a portion of your tax savings in a retirement program.

  SHOW ME AN EXAMPLE
  The employee's savings will depend on the level of benefits elected under the plan and the employee's tax rate. The following examples will help illustrate the tax savings available under the plan:

  An individual in the 15% federal tax bracket elects $150 per month to cover unreimbursed medical expenses, a total of $1,800 for the entire year. During the year, the employee spends only $1,700, forfeiting the remaining $100 in the account. The employee still saves approximately $300 by participating in the plan.

  	Without Plan	With Plan	Benefit Balance
  Salary Election under Flex Plan	$25,000	$25,000 (1,800)	$ 1,800
  	-------	-------	-------
  TAXABLE WAGES	25,000	23,200	1,800
  Federal Income Tax(15%)	(3,750)	(3,480)
  FICA & Medicare Tax	(1,913)	(1,775)
  Alabama Income Tax(5%)	(1,250)	(1,160)
  	-------	-------	-------
  NET PAY	18,087	16,785	1,800
  Orthodontics	(1,080)		(1,080)
  Major Medical Deductible	(100)		(100)
  Other Major Medical	(140)		(140)
  Dental	(120)		(120)
  Vision	(160)		(160)
  Major Medical Co-Pay	(100)		(100)
  	-------	-------	-------
  AMOUNT LEFT IN PLAN			$100
  			=======
  NET SPENDABLE INCOME	$16,387	$16,785
  	=======	=======
  SAVINGS USING PLAN      $298
  =======

  An individual in the 28% tax bracket elects the same medical amount as the other example, but also elects $5,000 for dependent day care. The amount paid for dependent day care no longer qualifies for the child care credit on the individual's personal tax return; however, the employee saves approximately $2,500 as a result of participating in the plan.

  	Without Plan	With Plan	Benefit Balance
  Salary Election under Flex Plan	$75,000	$75,000 (6,800)	$ 6,800
  	-------	-------	-------
  TAXABLE WAGES	75,000	68,200	6,800
  Federal Income Tax(28%)	(21,000)	(19,096)
  FICA & Medicare Tax	(5,738)	(5,217)
  Alabama Income Tax(5%)	(3,750)	(3,410)
  	-------	-------	-------
  NET PAY	44,512	40,477	6,800
  Orthodontics	(1,080)		(1,080)
  Major Medical Deductible	(100)		(100)
  Other Major Medical	(140)		(140)
  Dental	(120)		(120)
  Vision	(160)		(160)
  Major Medical Co-Pay	(100)		(100)
  Day Care	(5,000)		(5,000)
  	-------	-------	-------
  AMOUNT LEFT IN PLAN			$100
  			=======
  NET SPENDABLE INCOME	$37,812	$40,477
  	=======	=======
  SAVINGS USING PLAN      $2,565
  =======

  NOTE: Your tax savings will depend on your individual situation. You should consult your tax advisor to determine your actual savings.

  TAX DEDUCTIBLE MEDICAL EXPENSES
  The following is a representative list of health care expenses allowable under the Internal Revenue Code.
  Acupuncture Alcoholism Treatment Ambulance Artificial Limbs Birth Control Pills Birth Prevention Surgery (Vasectomy) Blind Special Education Braces & Orthodontic Expense Braille Books & Supplies Car Controls for Handicapped * Certain Over the Counter Medications Chiropodist Services Chiropractors Christian Science Practitioners' Fees Co-Insurance Amounts Contact Lens Insurance Contact Lenses & Supplies Cost of Operations & Related Treatment (not cosmetic) Crutches Deductibles on Medical Coverage Dental Fees Dentures Diagnostic Fees Diets (Cost Above Normal Meals) * Disposable Diapers-Brain Damaged Child Drug Abuse Treatment Drugs & Medical Supplies Dyslexia (Language/Remedial Training) Elastic Stockings Eyeglasses (Includes Examination Fee) Guide-Walk Blind Child to School Halfway House (Rec. by Psychiatrist) Handicapped Schools or Care* Health Club (Prescribed for specific illness) * Hearing Devices & Batteries Home Improvements for Medical Cond. * Hospital Bed (Prescribed by Physician) Hospital Bills Hypnosis to Treatment Illness Insulin Iron Lung Laboratory Fees Lasik Eye Surgery		Laetrile by Prescription * Lodging for Med.Care ($50/Day Each) Mattresses/Boards for Arthritis Membership Fees-For Medical Service (e.g.HMO) Mental Illness-Cost of Confinement Midwife Note-taker/Interpreter-Deaf College Student Nursing Services (including Board/SS Tax) Obstetrical Expenses Operations Oral Surgery Organ Donor's Costs Orthodontics Orthopedic Shoes Osteopathic Services Oxygen & Equipment for Illness Physicals-Routine & Non-Diagnostic Physician Fees Podiatrist Services Prescription Drugs Psychiatric Care Psychologist Fees * Reclining Chair-Health-Prescribed * Retarded Persons-Cost of Special Home Retirement Home Expense-Medical Part Seeing-Eye Dog (Including Upkeep) Sexual Problems Treatment (Psychiatrist) Sterilization Fees * Surgical Fees (not cosmetic) Swimming Pool/Spa (By Prescription) Teacher for Severe Learning Disabled Telephone Equipment-Hearing Impaired TV Attachments-Hearing Impaired Therapeutic Care-Drug/Alcohol Addiction * Therapy Treatments Transportation-To/From Medical Care * Tuition Fees for medically handicapped (School Gives Medical Cost) Vitamins(By Prescription) Weight Loss Program (Prescribed for specific including obesity) Wheel Chair Wigs X-Rays
  NOTE THAT ANY OF THE EXPENSES SHOWN ON THIS LIST FOR EITHER YOU OR YOUR SPOUSE (IF YOU ARE FILING A JOINT RETURN) OR FOR ANY DEPENDENT (SUCH AS A CHILD OR PARENT FOR WHOM YOU ARE PROVIDING SUPPORT) CAN BE REIMBURSED TAX-FREE THROUGH THIS ACCOUNT. * Specific eligibility required. Call 1-800-257-0986 for details.

  This website and illustrations are for informational and communication purposes only and do not constitute a plan document. If there is any discrepancy between the plan document and the communication material, the plan document will override these materials. Auburn University reserves the right to modify, amend, or terminate this plan at any time.