Flexible Spending

For those of you who are not familiar with Flexible Spending Account benefit plans - they are a provision in the IRS tax code that allows you:

• to pay yourself back for qualified non-reimbursable health-related expenses not covered by other insurance. Expenses you incur for both childcare and dependent care are also eligible for reimbursement
• to set aside dollars from your paycheck into the Flexible Spending Account plan on a pre-tax basis, which actually increases your take home pay

1. When you participate in either the Flexible Spending Plan, or Dependent Care Plan or both plans, through Direct Deposit, you choose a set dollar amount to have deducted from your gross income before any taxes are taken out.
2. The money is deposited into a reimbursement account which has been set up in your name.
3. When you pay for an expense, send your receipt to ABS and they will send you a reimbursement check from your account.

The IRS lets you make deductions on a "pre-tax" basis. For example, if you contribute $600 to a FSA account and $3,000 to a DCA account, that is $3,600 of your annual salary that will not be taxed. You will not pay Federal and State tax (if applicable), Social Security or Medicare. For most people, that is a combined savings of 30%!

If you contribute to these plans and do not use all the money you have deducted, you will not get your remaining balance back. The IRS has strict guidelines on this money because of the tax advantages. Ask ABS for advice when you are planning your deductions.

This is a partial list of expenses that may be reimbursed through Flexible Spending and Dependent Care Accounts. Employees can deduct expenses for themselves, their spouses and their eligible dependents!

• Acupuncture
• Contact lenses & solution
• Alcoholism treatment
• Co-pays: office & prescription
• Artificial teeth
• Co-insurance
• Before/after school programs
• Day camp
• Boarding and care of physically or mentally disabled
• Deductibles –medical & dental
• Dental work (unreimbursed, non-cosmetic)
• Braille books, magazines, keyboards phones, etc.
• Diagnostic fees
• Eldercare expenses
• Care for the learning disabled
• Electrolysis (medically necessary)
• Child care expenses
• Eyeglasses, sunglasses (prescription)
• Chiropractic care
• Fees for practical nurses
• Companion dog for sight or hearing disabled
• Fees for healing services
• Health clubs
• Hearing aids, devices & batteries
• Psychiatric care
• Home improvements for medical considerations (rails,ramps,etc.)
• Psychologist fees
• Routine physicals (not covered by insurance)
• Hospital bills
• School & tuition for developmentally disabled
• Hypnosis for treatment of illness
• Swimming pool/spa installation & maintenance
• Infertility treatment if recommended by physician
• Insulin
• Telephone equipment for the hearing impaired
• Laboratory fees
• Transportation expenses to/from places to receive medical treatment
• Laser eye surgery
• Massage therapy (medically necessary)
• Treatment for substance abuse, including inpatient hospitalization
• Medications
• Mouth guards (medically necessary)
• Weight loss programs to treat medical conditions
• Oral contraceptives
• Orthodontia
• Wheelchairs
• Orthopedic shoes
• X-rays
• Over the Counter Drugs and Medicines
• Preschool
• Prosthetics

*Some items may require further documentation from your physician.

For a complete listing and explanation of eligible charges for these plans, please see IRS Publication 502 "Medical and Dental Expenses;" and 503 "Child and Dependent Care Expenses."

Estimate your reimbursement or "out-of-pocket" medical and dental expenses for the coming year. Remember: You can include unreimbursed expenses for your spouse and dependents! See IRS publications 502 & 503 for specifics on what the IRS allows or call ABS.

Focus on the kinds of expenses you and your family normally have scheduled for the coming year. Remember that you will not get your unused account funds back if you do not spend them in your plan year.

FSA and DCA plans are a great way to stretch your paycheck and save on the cost of unreimbursed medical, dental and child or eldercare expenses for you and your family. The IRS has rules for these plans as they involve tax savings. For example, dependent children that are in daycare, after school care or day camps must be under the age of thirteen (13). In order to participate in the Dependent Care Program (DCA) parent/s must be gainfully employed, seeking gainful employment or be full time students. Please study the guidelines carefully to learn how to make this plan work effectively for you. Feel free to call ABS or your benefits point person should you have any questions!

1. Save all receipts for qualified expenses!

Submit your receipt(s) along with ABS's reimbursement form. Your Request may be mailed or faxed to ABS. ABS will reimburse you from your account. We recommend you save all your receipts in one place, perhaps in a file or envelope to help you stay organized throughout the plan year.

• Receipts must show: The date of the expense (it must be during the plan year) and the kind of expense (to prove to the IRS that it is a qualified expense).
• Examples of receipts include: Receipts for office co-payments, receipts for prescriptions, Explanation of Benefit (EOB) statements form, which show the amount or percentage of a medical or dental charge your insurance company paid and how much you owe (i.e. deductibles, co-insurance payments, ineligible expenses, etc.), the bill for the medical and/or dental expenses which your insurance company does not cover.

Provide the page of your plan that states the expense is not covered (this needs to be sent only one time as ABS will keep this documentation in your file), receipts from daycare or eldercare facilities or copies of receipts you pay to in-home providers.

2. Submit your qualified receipts with ABS's reimbursement form.

Receipts are required to verify that you are spending the money from your account on eligible expenses. You can submit your receipts once or as often as you like. However, processing of reimbursement checks require a minimum of $20 of receipts. You may call ABS at any time to confirm the balance of your account. All participants will receive a reminder towards the end of the plan year which outlines the account balance.

3. Watch for quick reimbursement checks from ABS!

ABS is committed to sending your reimbursement checks quickly, usually within one week of receiving your signed Reimbursement Request form and receipts. We always send an Explanation of Benefits with your check to show you the updated account balance.

4. Spend all your money! You cannot get back what you do not spend.

The IRS has strict rules regarding reimbursement. When you enrolled, you told the IRS you were reducing your taxable salary by $X for the plan year. According to the Federal Tax guidelines, your company receives any unspent money. However, Iona University does not want you to lose this money! It is up to you to plan wisely and when you enroll, ask questions. ABS is more than willing to help you make this benefit work for you!

5. It is easy to avoid losing money!

When you are estimating how much you, your spouse and dependents will have in medical and dental expenses, think about your past expenses. Avoid thinking about the "worst case scenario" because you cannot predict those kind of extra expenses (and hopefully you will not have them!). Avoid overestimating. It's easy to save money with this benefit as long as you plan properly.

6. You cannot change or stop deductions during the plan year unless there exists the following circumstance(s):

• The birth or adoption of a child
• Marriage, divorce or legal separation
• Spouse employment changes
• Death
• Losing or quitting a job

7. You can only sign up once a year during re-enrollment for the upcoming plan year (unless you are a new employee in which case you will have a limited enrollment period).

8. Everyone must complete an enrollment form whether or not you wish to participate.

This must be done before the new plan year starts. Just like medical and dental benefits, your company must document that you are aware of this benefit and that you have elected to sign up for or waive it.

9. If you terminate your employment, you cannot submit receipts for expenses incurred after you leave your company.

You usually have 60 days after you leave the company to submit your receipts to ABS for remittance. Expenses will only be reimbursed for services incurred prior to the date of termination. See your benefits department to discuss possible cobra options.

10. Call ABS at any time with questions on how to save with this benefit.

ABS manages this benefit for many companies and can answer all of your questions. Call ABS at (860) 675-2261 or (877) 732-8125.

ABS Advanced Benefit Strategies
30 Mill Street
Unionville CT 06085
(860) 675-2261 or (877) 732-8125
www.abs125.com

The College reserves the right to change the employee's contribution, to modify or amend the plan design or terminate the plan.