benesyst

How to use your Flexible Benefits Plan.

Information for new and present participants in Dependent daycare expense flexible spending account

Health care expense flexible spending account

BENESYST

Copyright © 2002, 2003, 2004, 2005

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I don’t want to read this whole booklet!

Can you bottom-line this for me?

Sure, read the following summary. If you’re interested,there’s more useful information in this booklet.

Why participate in Flex?

Flexible spending accounts (FSAs) are simply the besttax break available to most of us. Even if you’re rich,you cannot afford to ignore FSAs. You save theincome/withholding taxes (23%-46%) on every expenseyou pay through the flex accounts, depending on yourtax bracket. It’s the simplest way to convert tax dollarsinto spendable cash. FSAs can save you thousands ofdollars over the long term.

How do I enroll?

First figure out the amount of expenses you’re sure youwill incur in the upcoming plan year for either theHealth Care or Dependent Daycare Flexible SpendingAccount-or both! (It’s OK to be conservative). Use thehelpful worksheets on pages 10 and 12. Keep yourbooklet for reference and complete the paper orelectronic (if applicable) enrollment form-please print!Hand it in by the deadline and depending upon youremployer’s plan you’ll receive a confirmation statementbefore the beginning of the plan year. Enjoy your extraspendable cash!

I’m interested but I have questions…

In survey studies of flexible spending account planparticipants, people generally have three main concernsabout flex. Here they are, along with the solutions we’vefound to work best for each of them:

1. “I heard flex is a “use it or lose it” plan. I’m afraid of losingmoney!” With our administrative process, the numberof people who actually lose anything at all is less than2%. The simple way to avoid this is to set aside moneyonly for items you are sure to purchase this year, suchas medically necessary prescription drugs, prescriptionglasses, prescription contact lenses, etc. Dependingupon your employer’s plan you may even bereimbursed for over-the-counter drugs like Tylenol,Nyquil and Tums! Inside this booklet is a list of manymore allowable expenses.

2. “How long does it take to get reimbursed?” Your employerselected the fastest claims payer in the U.S.Benesyst’s turn around time is two business days orless after date of receipt for Dependent DaycareExpense Reimbursement and five business days orless after date of receipt for Health Care ExpenseReimbursement.

3. “I have to fax or mail provider statements, receipts, orinsurance Explanation of Benefits (“EOBs”), right?… How do Istay organized?” Depending upon your employer’s planyou may receive a BeneBox™ organizer box. It’s easyto use and you can save all your receipts in it, alongwith this booklet, account statements (if applicable),and up to date balance information that come witheach reimbursement. Just place all your flex forms inthe BeneBox™ and request reimbursement as often asyou like! It’s truly easy.

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A simple way to save significant tax dollars.

What’s a Flexible Spending Account (FSA)?

Flexible Spending Accounts (FSAs) provide a simpleway for many people to save significant tax dollars.Flexible Spending Accounts allow you to pay for certainexpenses that are medically necessary or for medicalcare (such as out-of-pocket medical costs) or fordependent daycare costs so you and your spouse maywork with gross (pre-tax) instead of net (after-tax)income. This leaves a smaller amount of income subjectto taxation. When you pay less in income taxes yourspendable income increases.

There are two types of FSAs available to you. (Your perpay check share of employer-sponsored health and/ordental insurance cost is automatically withdrawn on apre-tax basis.) There are separate Flexible SpendingAccounts (FSAs) for health care expenses anddependent daycare expenses. You calculate how muchout-of–pocket expenses you expect to have for healthcare and/or dependent daycare costs over the plan year.You can elect to contribute this amount, pre-tax, to yourFSA and have the FSA reimburse you for the expense.The annual amount (your “election”) is spread out evenlyover the plan year by dividing it over the number of paychecks for the year. This fractional amount is depositedinto your FSA with each pay check. Providerstatements, receipts or insurance EOBs containingallowable expenses may then be submitted and paid (orreimbursed) directly from Benesyst, the FlexibleSpending Account administrator.

What’s the advantage of using pre-tax dollars to payfor these expenses?

Increased spendable income: by using pre-tax dollars,you are able to legally stretch your hard-earned money.If you pay 25% in taxes (Federal & State Income Taxesand Social Security), you would have $0.75 to spend outof every $1.00 you earned. Through your personalFlexible Spending Account, a dollar earned anddeposited in your account is worth a dollar. This meansyou save 25% and, in that case, the savings are greater.

What kind of expenses may I pay for through myFlexible Spending Account?

A variety of out-of-pocket health care expenses incurredby you, your spouse and legal and eligible dependents-not paid for by health plans-are eligible. These ofteninclude over-the-counter non prescription drugs (only ifpart of employer’s plan), prescription drug copays, eyeexams, prescription eyeglasses, prescription contactlenses, non-cosmetic dental expenses and office visitcopays. See pages 13-19 for more detailed informationon health care expenses eligible for reimbursement.These out-of-pocket costs must be medically necessary;

cosmetic procedures, cosmetic Rx prescriptions, personaluse and general everyday items are not reimbursable.Your company has a limit on the dollar amount you mayput into the health care reimbursement portion of yourFlexible Spending Account. This limit is shown on yourenrollment form or is available from your HR or BenefitsDepartment.

Childcare expenses incurred while both you and yourspouse are working are a significant expense. Someexamples of eligible dependent daycare expenses are at-home care by babysitters (must be a non-dependent),licensed nursery school or daycare centers and non-medical care for an elderly or disabled adult member ofyour household. The following expenses are NOTeligible for reimbursement: expenses incurred while youare away from work due to illness or leave of absence,payments to an individual you claim as a dependant,caregivers transportation expenses, overnight campexpenses, kindergarten tuition expenses. The IRSimposes limits on the amount of money you may setaside for your Dependent Daycare FSA, which arecovered later in this booklet.

FSAs are authorized and regulated by Sections 125 and129 of the Internal Revenue Code. Healthcare FSAsfollow the definition of medical care as stated in Code §213. Healthcare FSAs do not follow Publication 502;please see the list in the back of this book forprocedures/items that are and are not reimbursable.Flexible Spending Accounts are offered by mostemployers because they are useful in reducing theportion of your gross income subject to taxation. Thisincreases your net-spendable income. Flexible SpendingAccounts are available to all eligible employees.

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BENESYST 3

Get your account info anytime!Visit www.benesyst.net 24 hours a day.

What happens to the money put into the FlexibleSpending Account?

Simply stated, the amount you elect to set aside forexpenses is transferred, before taxes, into your personalFlexible Spending Account. When you need it, and asoften as you like, you may request reimbursement byfilling out an Easy Reimbursement Request Form andsubmitting it by mail or fax with a copy of your itemizedreceipt, or Explanation of Benefits (EOB) to Benesyst.A check will promptly be sent to your home for eligibleexpenses you or your dependents have incurred.

When do I receive my reimbursement check?

Checks for health care expenses are processed after fivebusiness days of receipt at Benesyst. You may withdrawup to your annual election (the amount you elect at thebeginning of the plan year) at any time. Daycareexpenses will be processed within two business days ofreceipt. You may only withdraw up to the total of yourdeposits to date, but we encourage you to submit for thefull amount charged and we will do the bookkeeping foryou.

Note: Your employer may arrange a reimbursement schedule otherthan that described above. Also, your employer may offer directdeposit. Please refer to your enrollment materials for more detail.

How do I verify my Flexible Spending Account status?Is there Internet or phone access?

Each time you receive a reimbursement check, yourbalance will be printed on your check stub. In addition,if your employer chooses, you may receive quarterlystatements reflecting the activity on your account. Youmay even receive a reminder in the 11th month of theplan with your account balance and informationregarding the end of the plan year.

For immediate access to this information, you can viewyour personal account and claim status information on-line at www.benesyst.net. Using a touch-tonetelephone, you may use the toll free Benesyst InfoLine(1-800-670-7131) to receive personal accountinformation as well as general information on FSAs.Your account and claim status information on both theweb site and the InfoLine are available 24 hours a day.

What happens if I don’t spend all of the money in myaccount before the end of the plan year?

It is very important to conservatively estimate healthcare and dependent daycare expense amounts. The IRSregulations state that dollars left in your account at theend of the plan year cannot be given back to you. Whilevery few people ever lose money this way, this risk canbe eliminated if you elect no more than you are sure willbe used during the plan year. The worksheets on pages10 and 12 will help you determine the right election foryou.

To help you keep track of available dollars, you will benotified of your account balance with eachreimbursement check. In addition, your personalaccount and claims status information is available toview at www.benesyst.net or if you have a touch-tonetelephone, you can also receive this information usingour toll-free InfoLine (1-800-670-7131).

Once I have elected to participate, may I change mymind or the amount of the deposit?

Your election to participate may only be made once ayear and the amount may not be changed unless there isa change due to, and consistent with, a change in familystatus. A qualified change in family status must bereported within 30 days of the change and includes: • Marriage, divorce, death of a spouse, legal separation

or annulment;• Change in the number of dependents, including birth,

adoption, placement for adoption, court-documentedchange in custody arrangement, or death of adependent;

• Any of the following for you, your spouse ordependent: termination or commencement ofemployment, a strike or lockout, commencement orreturn from FMLA, or any change in employmentstatus that affects eligibility for benefits;

• One of your dependents satisfies or ceases to satisfythe requirements for coverage due to change in age,student status, or similar circumstances;

• A change in daycare providers or rates charged by theprovider (must not be a relative) which would be asignificant increase or decrease.

Note: A rate or benefit change is not a qualified change in familystatus when the daycare provider is a relative of the participant or arelative of the participant’s spouse.

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Requesting reimbursement is easy!

Please show me an example of how the plan works.

How do I request reimbursement?

Once you are enrolled, claims are made by submitting anEasy Reimbursement Request form. They are availableon our web site after you have logged in, by fax-backservice, or the sample in this booklet may be photocopied. Simply complete the form, attach clear copies ofyour supporting documentation, sign at the bottom (veryimportant) and fax or mail the form to Benesyst. It isvery important that you keep copies or the originals ofall submitted materials.

What is acceptable documentation to attach to myhealth care reimbursement request?

Acceptable documentation includes copies of any receiptor statement containing the provider’s name or storename, a clear description (itemized) of the serviceprovided, the actual date of the purchase or service (notthe billing date) and the amount of the eligible expense.A cash-register tape with itemized descriptions of over-the–counter drug expenses is required. Otherdocumentation includes prescription drug receipts (showRx name), office visit copay receipts, and Explanation ofBenefits (EOBs) from an insurance company-which

reflect “patient responsibility”-are necessary when anyhealth or dental plan partially covers the expense. Ifthere is no insurance, itemized bills showing the serviceand dates are acceptable as long as you indicate on theitemized bill that there is no insurance coverage. Aprovider’s statement showing only “balance due,” blankreceipts with only a date and amount (with nodescription of service), cancelled checks, credit cardreceipts/statements are not acceptable documentation.

For reimbursement of on-going service (for example, 12weeks of therapeutic massage prescribed by a physiciandue to an injury), a copy of a physician’s note or Rxletter describing the diagnosis, medical necessity andprescribing the service for the defined period of timemust accompany each reimbursement request to avoidprocessing delays or denial of the claim. The physician’snote is good for the plan year only.

In order to be reimbursed, the service must have beenrendered in your current plan year. Reimbursement isbased on the date of service, not the date when paymentis made. Therefore the service date must be on eachreceipt or statement. Paying for future services orpre-payments is not allowed.

Earnings Illustration: Annual Tax Savings Using a Flexible Spending Account

Without FSA

Account

With FSA Account

Advantages

Gross Pay $40,000 $40,000

Contribution to flex plan (before

tax dollars) 0 -$3,000*

Taxable Income $40,000 $37,000

Estimated taxes**

- $6,233 - $5,387 Less Taxes

Income After Taxes

$33,767 $31,613

Dependent Care expenses

- $2,000 - $2,000

Medical/Dental Vision expenses

- $1,000 - $1,000

Tax free plan reimbursement

0

Net income after taxes & expenses

$30,767

$3,000 Tax free

reimbursement

$31,613 More money in your paycheck

Net Savings by participant in Flex Account is $846.00 * Contributions to the flex plan are "pre tax" and therefore reduce taxable

gross income. The reduced gross is what is reported on the W2

** Assumes federal and state taxes of 28% and social security withholding of 7.65%

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Daycare and orthodontiaPaying these and other expenses through your FSA can save thousands of dollars!

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How do I arrange to have my daycare provider paiddirectly?

Ask your HR department, benefits office or go towww.benesyst.net for a direct payment authorizationform. Indicate on the form that you wish to have theprovider paid directly. You must sign the form. Mailthis form directly to Benesyst, Inc. Submit your claimsrequesting service dates, your provider’s information,the provider’s tax ID, your dependents names and agesand the amount charged for the daycare. Your providerwill receive checks directly for services rendered, andyou will receive a voucher check for your recordsshowing the amount of the reimbursement sent to yourprovider.

NOTE: This option is not available in all cases. Where it is available,direct payment is limited to one provider.

As stated above, you must send a reimbursement request for thespecific amount of the reimbursement. If you are new to the plan, forthe first pay period or two, you may have to continue paying yourdaycare provider personally until a payroll deduction appears on yourpaycheck. Benesyst does require continuing proof of service, for yourprotection, and to comply with the IRS regulations. To make thiseasier, you may wish to make multiple photocopies of a partiallycompleted form containing the information that stays the same foreach request. Then you will only need to fill in the dates of serviceand signatures.

What happens if I terminate employment or take aleave of absence during the plan year?

Your status as an active participant in the health careFSA ceases with your termination. After you terminate,funds remaining in the health care FSA may be paid outif the date of service for your eligible expenses occurredon or prior to your termination date. However under theFederal continuation laws (COBRA), the health carereimbursement account is considered a COBRAcontinuable plan. Therefore, if you have funds in youraccount and do not have sufficient eligible expensesincurred prior to the date of termination, you may electto continue your participation in the plan throughCOBRA. You will be required to continue making yourcontributions on a monthly basis, after tax.

Your contributions to your dependent daycare FSA stopwith your termination; however, you may continue torequest reimbursement from your account for eligibleexpenses incurred through the remainder of the planyear until the funds in the account are depleted.

In the event of a Family Medical Leave of Absence(FMLA), you may accelerate your contributions inadvance of the leave (pre-tax), continue your currentcontributions on an after-tax basis during the leave, orincrease your per pay check contribution for theremainder of the plan year upon your return. You maycontinue to request reimbursement for eligible expensesduring this period only if you had pre-paid or contributedto your account while you were on leave. You may waitand request reimbursement upon your return to work ifyou are making up the contributions.

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Daycare and orthodontiaPaying these and other expenses through your FSA can save thousands of dollars!

I have orthodontia expenses. How willreimbursements be handled?

A health FSA may reimburse a medical expense only ifthe participant provides a written statement from anindependent third party that the medical expense hasbeen incurred. Orthodontia is different because theservice may span several years. The IRS requires thatthe cost of such procedures be reimbursed over theentire length of the treatment.

In order to process your claim, a copy of thecontract/agreement with the orthodontist shouldaccompany each reimbursement request. The contract

should include: the date the appliance was placed(banding date or date of when the work began), length ofthe treatment, the total amount of treatment, theamount covered by insurance, an initial downpayment/record fee (if any) and the monthly payment.

The record fees and initial down payment arereimbursable in full once the appliance is placed; theremaining balance (less insurance) may be paid in equalmonthly installments over the length of the service. Ifthe service will extend past one plan year, you will wantto estimate your flex benefit elections carefully. Below isan example.

Ellen Cable participates in a June 1 to May 31 FSA Plan Year and her daughter is getting braces installed for 18 months. Thetotal bill stated on the contract prepared by the Orthodontist is $3,800. Her health insurance plan will pay $1,000, leaving$2,800 for Ellen to pay out-of-pocket. The orthodontist will charge Ellen $500.00 on August 1, for creating and installing theorthodontic appliance. She may request reimbursement from her FSA on the following schedule:

First Election Second ElectionAugust 1 $500.00 June 1 $135.29

September 1 $135.29 July 1 $135.29

October 1 $135.29 August 1 $135.29

November 1 $135.29 September 1 $135.29

December 1 $135.29 October 1 $135.29

January 1 $135.29 November 1 $135.29

February 1 $135.29 December 1 $135.29

March 1 $135.29 January 1 $135.36

April 1 $135.29

May 1 $135.29

ANNUAL ELECTION (1) $1,717.61 ANNUAL ELECTION (2) $1,082.39

We recommend paying for the service as received. Ifyour provider requires or recommends payment in fullupon commencement of service, you may pay in full out-of-pocket. However, you must receive reimbursementfrom your FSA on a monthly basis throughout the termof the service. Please ask your provider for a writtenitemization of the fees as if you were paying monthly.

This monthly amount is reimbursable through your FSAon the first of each month, as service occurs. Under no

circumstances will the full amount be reimbursable

through your FSA at the commencement of, or in

advance of service.

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Need supplies? More questions?Visit www.benesyst.net or call 1-800-670-7131.

Will participation in a Flexible Spending Account planaffect my Social Security benefits?

Participation in the health care or dependent daycareexpense reimbursement plan may affect your SocialSecurity benefits. The portion of the FICA taxcontributed to Social Security is based on taxableincome. Since your taxable income is reduced, theamount of taxes paid to Social Security is also reduced.Therefore, Social Security benefits may also be slightlyreduced. The effect should be minimal, however, andshould be balanced against your potential current andongoing tax savings from Federal, State and FICA.

What if I run out of supplies?

Easy reimbursement request forms are available on ourwebsite (www.benesyst.net), by calling our InfoLine(1-800-670-7131) and using the fax-back option, or bycontacting Benesyst. In addition, you will find areproducible Easy Reimbursement request Form onpage 8 of this booklet.

How often may I submit reimbursement requests?

There is no limit as to how often you may submitreimbursement request, but the minimum check issuedwill be $10.00 until the last check of the plan year, forwhich there will be no minimum.

What if I have questions that haven’t been answeredhere?

Anytime you have questions about your FlexibleSpending Account, you may contact Benesyst or yourHR department. The Benesyst InfoLine (1-800-670-7131)

is another resource available to you. When you call theInfo Line you will have the option to receive personalaccount balance and claim status information or hearrecorded information on the topic of your choice. Inaddition, our web site (www.benesyst.net) offerspersonal account balance and claim status information,an extensive list of frequently asked questions andanswers, and a comprehensive listing of eligibleexpenses. The web site has “real time” information andthe InfoLine is updated daily.

May I fax my reimbursement request and copies of myreceipts?

Yes. You may submit claims by fax or by mail. Pleasedo not do both as it will cause a delay due to a duplicateclaim audit. Please be sure to send clear copies and keeporiginals of everything you submit for reimbursement.

May I be reimbursed for my health care or dependentdaycare expenses from last year?

No. The IRS requires that all expenses be incurredduring the plan year. Reimbursement is based on whenthe service is rendered or provided, not how and/orwhen the service is paid for. You do, however, have agrace period after the plan year ends to submit yourreimbursement request for those expenses incurredwithin the previous plan year. Please consult yourSummary Plan Description (available from yourHR/Benefits Department) for the length of the graceperiod your plan allows.

May I claim more than the current balance of thecumulative deposits to my reimbursement account?

Dependent Daycare FSA: You may only withdraw up tothe total of your deposits to date, but we encourage youto submit for the full amount charged and we will do thebookkeeping for you.

Health Care Expense FSA: You may withdraw up toyour annual election (the amount you elect at thebeginning of the plan year) at any time.

How do I use www.benesyst.net?

The first time you enter the site you’ll need to click onParticipant/Employee Access. Then follow theinstructions to establish your own password, (a minimumof 8 characters). Using your Social Security number andyour established password, you will have access to awide variety of services under Flexible SpendingAccount Services.

Mail or fax (not both) all requests to: Benesyst, Inc. / 800 Washington Avenue North, 8th Floor, Minneapolis, MN 55401 / Fax: 612-338-7969 or 800-310-8279 / Ph: 612-338-7131 or 800-670-7131 \\Prepress server\MAC Vol\Daily 91-00\77295_Benesyst_150lpi\Client Files\2_Easy ReimbursementNEW.doc

REQUIRED: Your Social Security Number

NO COVER SHEET IS NECESSARY IF FAXING ALL PORTIONS OF THIS FORM MUST BE COMPLETED

Date: To: BENESYST FSA Dept

Fax Dial: (612) 338-7969 Toll-Free: (800) 310-8279

From REQUIRED (Last Name, First Name): Your Fax Number: ( ) -

Your Daytime Phone Number: ( ) -

Total Pages: Employer (REQUIRED) AND Division (if applicable):

Flexible Spending Account (FSA) Easy Reimbursement Request

BEFORE USING, PHOTOCOPY AS NEEDED FOR FUTURE USE. ADDITIONAL FORMS AVAILABLE FROM H.R. OR VISIT WWW.BENESYST.NET

Medical, Dental & Vision Care Reimbursement Section (Submit Explanation of Benefits (EOB) if covered under insurance. No Insurance? Attach itemized bills.) Date of Service

Use different forms for different Plan Years

Name of Clinic or Store

Expense Description (e.g. Co-pay, Rx, Ortho,

Crowns, Glasses)

Person For Whom Expense Incurred

(self, spouse, child)

Total Amount of the Expense

Amount Paid by any Insurance

Plan

Net Amount of Expense (The amount paid out of your own

pocket, after any insurance)

$ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $

TOTAL HEALTH CARE EXPENSE REQUEST (this page only, use as many forms as needed):Please keep your originals and either fax or mail 81/2" x 11" copies of bills or receipts for the health care expenses included on this form. $

Dependent Daycare Reimbursement Section (Bills or receipts must be attached and individually listed below unless provider’s signature appears below). Name of Dependents REQUIRED Age REQUIREDDates of Care

From To REQUIRED Information on Service Provider

Name: Care for children aged newborn through 12 yrs. old only Net Amount of Expense

$ $

Address:

REQUIRED: ________ - ___ - ________ Service Provider’s Tax ID or Social Security Number

$

TOTAL DEPENDENT DAYCARE EXPENSE REQUEST (this page only, use as many forms as needed): Please keep your originals and either fax or mail 81/2" x 11" copies of documentation for the dependent daycare expenses included on this form. Service must be completed. $ IF DAYCARE PROVIDER COMPLETES ABOVE PORTION AND SIGNS BELOW, SEPARATE BILLING OR RECEIPTS ARE NOT NEEDED I, the undersigned, certify that I have provided daycare for the participant’s dependents as listed above for the periods indicated. The participant is responsible for the cost of these services,which have already have been provided. I further certify that I am not a child of the participant unless I am also (a) not a dependent of the participant and (b) over age 19.

X Dependent Daycare Provider’s Signature Date

Participant’s Statement and Signature PLEASE READ CAREFULLY: I, the undersigned participant in the Plan, certify that all expenses for which reimbursement or payment is requested by submission of this form were incurred/rendered during a period while I was covered under the Company’s Flexible Spending Account Plan with respect to such expenses and that the health care expenses are for medical care and, if applicable, have not been reimbursed or are not reimbursable under any other health plan coverage or FSA. I, the undersigned, certify that these expenses were incurred by me or a federally recognized dependent and are expenses eligible under federal law. I fully understand that I alone am responsible for the sufficiency, accuracy and truthfulness of all information relating to this request and that unless an expense for which payment or reimbursement is requested is an eligible expense under the plan and IRS law, I may be liable for payment of all related taxes including federal, state and/or city income tax and penalties on amounts paid from the plan which relate to the taxation of ineligible expenses. A copy or electronic facsimile of this form and all supporting documentation shall be deemed as valid as the original.

o IMPORTANT: Use TWO forms if expenses are from different plan years. o Requests for the prior plan year must be received by Benesyst before the end of the plan’s grace period. o Please keep your originals and either fax or mail 81/2" x 11" copies of documentation for the expenses included on this form together with this form. Benesyst is unabl e to return

documents submitted. If the form is not completed in its entirety it may be returned to you to complete and it will delay your reimbursement. o Please Note: an eligible receipt must include ALL of the following: Provider’s Name, Date of Service, Description of Service and Cost of Service (after insurance, if any).

X Plan Participant’s Signature Date

Attn:

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Dependent Daycare FSA vs. Federal Child Care Credit

Dependent Care Assistance Program (“DCAP”) vs. the Dependent Care Tax Credit (“DCTC”)

Below is a comparison for married couples filing a joint return with two qualifying individuals and $5,000 of dependent careexpenses, and are taking the standard deduction. The only income listed is wages and no other credits are claimed besidesDependent Care Tax Credit, Earned Income Credit and Child Tax Credit and Additional Child Tax Credit. Only federal taxsavings are considered (no state taxes or credits).

The dependent daycare FSA can provide significant taxsavings to you if you pay for the care of a dependent inorder to work. If you are married, both you and yourspouse must be employed (volunteer work does notapply), attending school full-time or looking for work tobe eligible.

Participation in the dependent daycare FSA mayproduce a larger tax savings than the Federal ChildCare Tax Credit. Please see the chart below to help youget a quick snap shot of which program may be best foryou.

With the dependent daycare FSA, you may claimexpenses up to a maximum of $5,000 per married

couple filing jointly (or single filing head of

household). The maximum election for those filing

single, non-head of household is $2,500. In addition,your contributions to the FSA are never taxed. Theamount of savings depends on your income level andyour tax rate.

The Federal Child Care Tax Credit is claimed after theend of the tax year by filing form 1040. Form 2441 mustbe completed, regardless of the program in which youparticipate. Since there are so many factors involved indetermining the best choice, we recommend you seek

the advice of a tax advisor.

NOTE: The Federal CCTC is $3,000 for one qualifying individual or$6,000 for two or more.

Information provided by EBIA (8/26/03)Example: If the gross wage is $30,000, participating in the DCAP would be more beneficial by $1,235

Gross wages beforeDCAP salary reductions

Est. State IncomeTax Rate of 6% (if

negative, the DCTCis better)

No State Income TaxParticipating in DCAP salary reduction

basis is better (or worse) than claiming theDCTC by this amount

Est. State IncomeTax Rate of 6% (if

negative, the DCTCis better)

No State Income TaxParticipating in DCAP salary reduction

basis is better (or worse) than claiming theDCTC by this amount

Gross wages beforeDCAP salary reductions

$10,000$13,000$14,000$15,000$16,000$25,000$30,000$35,000$36,000$37,000$38,000$39,000

($1,617)($547)($497)($91)$200$935$935$507$361$200$90($70)

($1,317)($247)($197)$209$500$1,235$1,235$807$661$500$390$230

$40,000$41,000$50,000$60,000$70,000$92,000$110,000$120,000$130,000$150,000$160,000$180,000

($3)$82$132$132$132$322$322$572$572$722$472$472

$297$382$432$432$432$622$622$872$872$1022$772$772

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Worksheet dependent daycare FSA

Type of Qualifying Expense Estimated Expense During Next Plan Year

Amounts paid to a dependent daycare center for childrenunder the age of 5 (e.g. nursery school or daycare) $ ________________________________________________________

Amounts paid for nanny or daycare servicesinside your home for children under the age of 13 $ ________________________________________________________

Latch key programs before and after school for children under the age of 13 $ ________________________________________________________

Summer daycare/day camp programs $ ________________________________________________________

Other (adult daycare programs, etc.) $ ________________________________________________________

ANNUAL ELECTION TOTALNext plan year’s dependent daycare expense $ _______________________________________________________ (A)

Number of pay periods in a year ________________________________________________________(B)

Divide A by B to equal the amount your wish to directto your pre-tax Dependent Daycare FSA per pay period $ ________________________________________________________(C)

Is this a conservative estimate? Transfer Amount A or C (as applicable) to your enrollment form.

Important!!

Note: Section 125 of the Internal Revenue code statesthat if you have a child in this program that reaches theage of 13 during the plan year the expense incurred forany daycare/after school/summer camp, etc. is no longereligible for reimbursement. Effective within 30 days ofyour child’s 13th birthday, you may modify yourcontributions for your dependent daycare FSA bynotifying your HR or Benefits Department.

Kindergarten expenses are not reimbursable for theeducation/school portion of the day. Kindergarten tuitionexpenses are eligible for reimbursement out of thedependent daycare FSA only if the expenses are for the“care” of the dependent. Again, these expenses are noteligible for reimbursement if they are for the educationof the dependent. If the facility provides both services,an allocation must be made for each service and theportion that is allocated for the care of the dependent isthe only portion that is reimbursable.

Dependent daycare expenses can only be reimbursedfrom the dependent daycare FSA after the service hasalready been provided. For example, a claim submittedon the first of the month for daycare expenses for thecoming month cannot, according to IRS regulations, bereimbursed until the end of the month even if the fee hasalready been paid.

Custodial care (no medical services) for an elderly or adisabled adult dependent who is unable to care for himor herself is eligible for reimbursement. The dependentmust live in your residence for at least eight hours eachday. If medical services are required you must use thehealthcare FSA.

If your daycare provider does not sign the claim form,appropriate receipts must be submitted showing thefederal tax ID/Social Security Number (if not already onthe claim form) date (s) of service and the charge for thecare of the child. Cancelled checks, credit cardreceipts/statements are not acceptable receipts.

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A simple way to save significant tax dollars.Dependent daycare FSA easy reference list

After school care: After school care that is primarilycustodial in nature is reimbursable. See extended dayprograms.

After school enrichment classes: Programs and lessonsthat are primarily for education or are skill orientedare not reimbursable.

Au Pair: amounts paid to an au pair for the care of achild are reimbursable. Transportation and other fixedcost related to the employment of an au pair are notreimbursable.

Baby-sitter: Amounts paid to a baby-sitter who is not adependent of the participant or the participant’sspouse, either inside or outside the participant’s home,are reimbursable. See Au Pair, Relatives.

Camp: See overnight camp, Summer day camp.

Deposits: Deposits that are specifically allocated to thecare of a dependent are reimbursable after the servicehas been provided. See Registration fees.

Educational expenses: Educational expenses for a child inKindergarten or higher grades are not reimbursable.See Kindergarten tuition, Tuition.

Elder care: amounts paid for the care of a dependentadult who is unable to care for him or herself that arenot associated with medical expenses are reimbursablethrough the dependent daycare FSA. The dependentmust live in your residence for at least eight hours eachday.

Extended day programs: Supervised activities for childrenafter the regular school program, which are primarilycustodial in nature, are reimbursable. See After schoolcare.

Kindergarten tuition: Kindergarten tuition expenses arenot eligible for reimbursement out of the dependentdaycare FSA. These expenses are eligible only if theexpenses are for the care of the dependent. Theseexpenses are not eligible for reimbursement if they arefor education of the dependent. If the facility providesboth services, an allocation must be made for eachservice and the portion that is allocated for the care ofthe dependent is the only portion that is reimbursable.See Educational expenses, Tuition.

Looking for work: Amounts for dependent daycare sothat the participant, or the participant’s spouse, is ableto look for work are reimbursable.

Nanny fees: Amounts paid to a nanny for the care of achild are reimbursable. Registration fees paid to ananny service are not reimbursable unless they arespecifically allocated to the care of a child and not tomaterials or other fees. See Registration fees.

Nursing home: Expenses related to the nursing homecare of a dependent are not reimbursable through adependent daycare FSA, but may be reimbursablethrough a health care FSA. See Nursing home on page 16of this booklet.

Nursery school/ Pre-kindergarten: Expenses for nurseryschool and pre-kindergarten are reimbursable.

Overnight camp: Overnight camp expenses are noteligible for reimbursement; even if the day and nightactivities are separately allocated. See Summer day camp.

Registration fees for care: a registration fee may qualifyas a child care expense if it is an expense that must bepaid in order to obtain care, but will not be reimburseduntil the care has been provided or would have to beprorated over the duration of the agreement with theprovider.

Relative of participant, expenses paid to – e.g. parent orgrandparent of participant: Yes, unless the relative is adependent for whom the participant/participant’sspouse can claim an exemption, or is a child or step-child of the participant under age 19.See Baby-sitter, Au Pair.

Sick-child center: Amounts paid to sick-child center areeligible if they enable the participant to go to workwhen the child is ill.

Sick employee: Amounts paid to care for a dependentwhile the participant stays home from work due toillness are not reimbursable.

Summer day camp: Summer day camp fees are eligiblefor reimbursement AFTER the child has attended thecamp. Supplies, registration, deposit, food, activities,transportation and other costs related to the summerday camp are not eligible for reimbursement.

Taxes: FICA and FUTA taxes paid to a daycareprovider are reimbursable.

Volunteer work – expenses incurred to enable employee tovolunteer: No, even if the volunteer work is for nominalpay.

Expenses not eligible:Diaper FeeMeals, snacks and beveragesActivity supply fees that are not related to careField tripsEnrichment classesLessons e.g. music, sports, education, etc.Transportation

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This worksheet will help you estimate your annualhealth care costs for items which are not fullyreimbursed by your health or dental insurance. This list is intended to be a guide of your morecommonly incurred medical expenses.

List all costs that are incurred by you, your spouse, or qualifieddependents (and that are not fully reimbursed by insurance):

Please see pages 13-19 for a listing of IRS allowableexpenses in a Health Care FSA. PLEASE NOTE, checkyour FSA SPD (Summary Plan Description) provided byyour company for any exclusions to this list. You mayalso contact your HR department, benefits office orBenesyst if you have any questions about FlexibleSpending Accounts. Only list those expenses youreasonably expect to incur in the next plan year, andestimate conservatively. Benesyst can issue a checkanytime during the plan year for up to your full annualelection.

Worksheet health care FSA

Common types of Qualifying Expenses Estimated Expense During Next Plan Year It is assumed that all expenses listed are NOT fully covered by insurance

Eye/physical examination copays $ ________________________________________________________

Rx Eyeglasses/spectacle lenses and/or frames $ ________________________________________________________

Rx Contact lenses and over-the-counter solutions $ ________________________________________________________

Laser eye surgery $ ________________________________________________________

Dental insurance deductibles and your out-of-pocket charges $ ________________________________________________________

Orthodontics, braces, false teeth/dentures, etc. $ ________________________________________________________

Over-the-counter drugs, if applicable (Tylenol, etc.) $ ________________________________________________________

Medical insurance deductibles or your share of charges $ ________________________________________________________

Health insurance copays (for office visits, etc.) $ ________________________________________________________

Medical doctors’ fees (share unreimbursed by insurance) $ ________________________________________________________

Prescription drug expenses or drug copays $ ________________________________________________________

Hearing aids and hearing aid batteries $ ________________________________________________________

Birth control expenses (Rx and over-the-counter) $ ________________________________________________________

Nursing home costs (for qualified dependents only) $ ________________________________________________________

Mental health, psychotherapy, etc. (non-marital, individual) $ ________________________________________________________

Acupuncture and other non-drug alternative medicine $ ________________________________________________________

Chiropractic services $ ________________________________________________________

Other unreimbursed hospital, lab or doctor expenses $ ________________________________________________________

Other (see list in this booklet) $ ________________________________________________________

Other (see list in this booklet) $ ________________________________________________________

ANNUAL ELECTION TOTALNext plan year’s unreimbursed health care expenses $ ______________________________________________________(A)

Number of pay periods in a year ______________________________________________________(B)

Divide A by B to equal the amount your wish to directto your pre-tax Health Care Expense Account per pay period $ ______________________________________________________(C)

Is this a conservative estimate? Transfer Amount A or C (as applicable) to your enrollment form.

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Abdominal disorders: Medical expenses, includingprescription drugs, associated with healing or relievingof abdominal disorders are reimbursable. Over-the-counter remedies are reimbursable.

Abortion: Medical expenses associated with a legalabortion are reimbursable. See Family planning, Pregnancy termination.

Acupuncturist’s fees are reimbursable expenses.

Airplane fare: See Transplants and Transportation.

Air purifier, humidifier, and home window air conditioner,prescribed by physician for allergy sufferer, are reimbursable. (Refer to Capital expenses.)Physician Rx note must accompany claim, see page 4,Physician’s note.

Alcoholism and drug abuse: Medical expenses paid to a treatment center for alcohol or drug abuse arereimbursable. This includes meals and lodging providedby the center during treatment. Also reimbursable are transportation costs to attend AA meetings ifattendance is based on medical advice as necessary for the treatment of the disease.

Anesthesiologist’s fees: Costs incurred by anesthesiologyare reimbursable.

Artificial limb: Expenses paid for an artificial limb are reimbursable.

Attendant: See Nursing services.

Automobile: See Car.

Birth control pills and devices: Medical expenses paid forbirth control pills and devices are reimbursable. Thisincludes over-the-counter items. Medical expensesassociated with a legal abortion are reimbursable. See Family planning, Pregnancy termination.

Braces: See Orthodontics.

Braille books and magazines: The amount by which thecost of Braille books and magazines for use by a personwho is visually impaired exceeds the price for regularbooks and magazines is reimbursable.

Breast augmentation: Expenses related to breastaugmentation (such as implants or injections) are notreimbursable because the procedure is cosmetic innature. However, medical costs related to the removalof breast implants that are defective or are causing amedical problem are reimbursable.

Breast reduction: Medical expenses related to breastreduction surgery are reimbursable only if a physiciansubstantiates (note required) that the procedure ismedically necessary (that is, to prevent or treat anillness or disease) and not for cosmetic purposes.

Capital expenses: If their main purpose is medical care,capital expenses paid for special equipment installed in a participant’s home or for improvements to thehome are reimbursable. For further details seediscussion under the heading Capital expenses, on the last page of booklet.

Car: Medical expenses are reimbursable for special hand controls and other special equipment installed in a car for the use of a person with disabilities. Also, theamount by which the cost of a car specially designed to hold a wheelchair exceeds the cost of a regular car is reimbursable. However, the cost of operating aspecially equipped car is not reimbursable. See Transportation.

Chair: The cost difference of a reclining chair purchasedon the advice of a physician (note required) to alleviatea heart, back or other condition is reimbursable. See Personal use items.

Child care: See Dependent daycare.

Childbirth classes: Expenses for childbirth classes arereimbursable, but are limited to expenses incurred bythe mother-to-be. Expenses incurred by a “coach”—even if that is the father-to-be — are not reimbursable.To qualify as medical care, the classes must addressspecific medical issues, such as labor, delivery andbreathing techniques.

Chiropodist’s fees are reimbursable expenses.

Chiropractor’s fees are reimbursable expenses.

Christian Science practitioner’s fees are reimbursable expenses.

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Health care FSA easy reference listAccupuncture, Braces, Chiropractors …

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Health care FSA easy reference listContact Lenses, Diabetes, Fertility, Hearing Aids …

Clinic: Medical expenses for treatment at a health clinicare reimbursable.

Coinsurance amounts: Medical coinsurance amounts anddeductibles are reimbursable.

Contact lenses: See Vision care.

Cosmetic surgery needed to improve congenital abnormality, personal injury, or disfiguring disease is reimbursable. Expenses for other types of cosmeticsurgery are not reimbursable. This applies to any procedure that is directed at improving the patient’sappearance and does not meaningfully promote theproper functions of the body or prevent or treat illnessor disease. For example, face lifts, hair transplants, hairremoval (electrolysis), teeth bleaching and liposuctionare not reimbursable. If there is a concern that amedical or dental surgery could be considered cosmetic,a doctor’s certification should be obtained explaininghow the procedure meaningfully promotes the properfunction of the body or prevents or treats an illness or disease.

Crutches: Medical expenses paid to buy or rent crutches are reimbursable.

Deductibles, medical: Insurance deductibles andcoinsurance amounts under the employer’s plan arereimbursable. Must be associated with services andservice dates. Insurance premiums are notreimbursable through a health care FSA.

Dental services: Expenses for medically necessary dentaltreatment are reimbursable. This includes fees paid forX-rays, fillings, braces, extractions, dentures, etc. Also see Cosmetic surgery.

Dermatologist’s fees are reimbursable expenses.

Diabetes management: See Insulin, Medicines.

Diaper service: Payments for diapers or diaper serviceare not reimbursable unless they are needed to relievethe effects of a particular disease.

Diagnostic services are eligible expenses.

Diets: See Special foods.

Drugs: See Medicines.

Drug addiction: See Alcoholism and drug abuse.

Elastic hosiery: for a medical condition are reimbursable.

Employment taxes: See Nursing services.

Eye examination fees: See Vision care.

Eyeglasses: See Vision care.

Family or group counseling or therapy is not an eligibleexpense unless verified by a physician’s writtenstatement of medical necessity for the treatmentof a medical condition. Physician’s note mustaccompany claim.See Marriage counseling, Psychiatrist’s fees, Psychoanalysis,Psychologist’s fees, Psychotherapist’s fees.

Family planning: Medical expenses paid for birth controlpills and devices are reimbursable. This includes over-the-counter items. See Birth control pills and devices, Pregnancy termination, Vasectomy.

Fertility treatment: Medical expenses related to thetreatment of infertility, including in vitro fertilization,are reimbursable.

Group medical insurance: See Insurance premiums.

Guide dog or other animal: The cost of a guide dog or other animal used by a person who is visually orhearing impaired is reimbursable. Costs associatedwith a dog or other animal trained to assist personswith other physical disabilities are also reimbursable,as are amounts paid for the care of these speciallytrained animals.

Gynecologist’s fees are reimbursable expenses.

Healing ceremonies by Native American medicine man:Expenses incurred are reimbursable.

Healthy baby care: See Nursing services.

Hearing aids: Medical expenses for a hearing aid andbatteries are reimbursable. Hearing aid insurance isnot reimbursable.

Hospital: Expenses incurred as a hospital in-patient orout-patient for laboratory, surgical and diagnosticservices qualify for reimbursement.

Human guide: Expenses for a human guide — to take achild who is visually impaired to school, for example —are reimbursable.

Impotence or sexual inadequacy: Medical expenses relatedto the treatment of impotence are reimbursable if substantiated by a physician.

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Health care FSA easy reference listInfertility, Laser Eye Surgery, Learning Disabilities, Medicine …

In vitro fertilization: See Fertility treatment.

Infertility: See Fertility treatment.

Insulin: The cost of insulin and other diabetic treatmentaids is reimbursable.

Insurance premiums: No premiums for any health plan,including health plans maintained by a spouse’semployer, are reimbursable through a health care FSA.

Laboratory service fees are reimbursable expenses.

Laser eye surgery: Medical expenses associated with laser eye surgery are reimbursable in all 50 states. See Lasik surgery, Radial keratotomy.

Lasik surgery: See Laser eye surgery, Radial keratotomy.

Lead-based paint removal: The cost of removing lead-basedpaints from surfaces in a home to prevent a child whohas (or has had) lead poisoning from eating the paintare reimbursable. These surfaces must be in poor repair(cracking or peeling) or within the child’s reach. Thecost of repainting, however, is not reimbursable.Physician’s note required with claim. See page 4.

Learning disabilities: Tuition payments to a special schoolfor a child who has severe learning disabilities causedby mental or physical impairments, including nervoussystem disorders, are reimbursable. A doctor mustrecommend that the child attend school. See Schools.Also, tutoring fees paid on a doctor’s recommendationfor a child’s tutoring by a teacher who is speciallytrained and qualified to work with children who havesevere learning disabilities are reimbursable.Physician’s note required with claim. See page 4.

Legal fees paid to authorize treatment for mental illnessare reimbursable. However, any part of a legal fee thatis a management fee — for example, a guardianship orestate management fee — is not reimbursable.

Lifetime care: Part of a life-care fee or “founder’s fee” paideither monthly or as a lump sum under an agreementwith a retirement home is reimbursable if it is allocableto medical care. The agreement must require a specifiedfee payment as a condition for the home’s promise toprovide lifetime assistance that includes medical care.Also, advance payments to a private institution for thelifetime care, treatment and training of an employee’sphysically or mentally impaired dependent upon theemployee’s death or inability to provide care arereimbursable. The payments must be a condition forthe institution’s future acceptance of the dependent and must not be refundable.

Lodging: The costs of lodging at a hospital or similarinstitution are reimbursable if the employee’s (ordependent’s) main reason for being there is to receivemedical care. See also Nursing home. The cost of lodgingnot provided in a hospital or similar institution while anemployee (or dependent) is away from home isreimbursable if four requirements are met: (1) thelodging is primarily for and essential to medical care;(2) medical care is provided by a doctor in a licensedhospital or in a medical care facility related to, or theequivalent of, a licensed hospital; (3) the lodging is notlavish or extravagant under the circumstances; and (4) there is no significant element of personal pleasure,recreation or vacation in the travel away from home.See Meals.

NOTE: The reimbursable amount cannot exceed $50 per night perperson. Lodging is included for a person whose transportationexpenses count as medical expenses, due to the fact that they aretraveling with the person receiving the medical care. For example, aparent traveling with a sick child, up to $100 per night.

Marriage counseling is not reimbursable.

Massage: Fees paid for massage are not reimbursableunless prescribed and substantiated by a physicianwith the claim to treat a physical defect or illness.Physician’s note required with the claim.

Mattresses: A mattress used exclusively to treat amedical condition such as arthritis is reimbursable. Aspecial mattress must be documented by a physician’snote. Only the difference between the special mattressand a comparable quality mattress is reimbursable.

Meals: Meals for the traveling patient only at a hospitalor medical institution are reimbursable.

Medical information plan: Amounts paid to a plan thatkeeps medical information so that it can be retrievedfrom a computer bank for medical care are reimbursable.

Medical services: Only legal medical services if they beara direct relationship to the provision of medical care toa taxpayer are reimbursable.

Medicines: Amounts paid for prescribed medicines anddrugs are reimbursable. A prescribed drug is one whichrequires a prescription by a doctor for its use by anindividual and is medically necessary. The cost ofinsulin and other diabetic care supplies and birthcontrol supplies and devices are also reimbursable.Perscriptions that are cosmetic related are notreimbursable. i.e. Retina-A, Propecia, Vaniqa, etc.

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Health care FSA easy reference listMental Health, Nursing Homes, Orthopedic Shoes, Prosthetics …

Mental health: See Psychiatrist’s fees, etc.

Mentally retarded, special home for: The cost for a mentallyretarded person to reside in a special home (not thehome of a relative) on the recommendation of apsychiatrist to help the person adjust from life in amental hospital to community living is reimbursable.

Native American healing ceremonies by medicine man:Expenses incurred are reimbursable.

Neurologist’s fees are reimbursable expenses.

Nursing home: Cost of medical care in a nursing home or home for the aged is reimbursable. This includes thecost of meals and lodging in the home if the main reasonfor being there is for medical care.

Nursing services: Wages and other amounts paid fornursing services are reimbursable. The services do nothave to be provided by a nurse as long as they are thekind of services generally performed by a nurse, suchas giving medication or changing dressings, bathingand grooming the patient. Personal services orhousehold services are not reimbursable. If theseservices are provided, the amounts must be dividedbetween the time spent on each.• Meals: Amounts paid for an attendant’s meals are

also reimbursable. Divide the food expense amongthe household members to find the cost of theattendant’s food.

• Upkeep: Additional amounts paid for householdupkeep because of an attendant are also reimbursable.This includes extra rent or utilities due to the need to move to a larger home to provide space for the attendant.

• Infant care: Nursing or babysitting services for anormal, healthy infant are not reimbursable.

• Taxes: Social Security, unemployment (FUTA) andMedicare taxes paid for a nurse, attendant or otherperson who provides medical care are reimbursable.

Obstetrical expenses are reimbursable expenses.

Optometrist’s fees: See Vision care.

Opthalmologist’s fees: See Vision care.

Orthodontics: Braces or orthodontics which are non-cosmetic are reimbursable on a monthly basis asservices/appointments are rendered. See page 6.

Orthopedic shoes: Costs of specialized orthopedic itemscan only be reimbursed to the extent that they exceedcomparable shoes. Difference is reimbursed, physician’snote is required.

Organ donor: See Transplants.

Osteopath’s fees are reimbursable expenses.

Over-the-Counter Drugs and Medicines: to alleviate or treatpersonal injuries or sickness are reimbursable. Thisincludes antacids, allergy medicines, pain relievers andcold medicines. The receipt must state the name of theproduct. See OTC Guide on www.benesyst.net. Note:your plan may not accept OTC items, check yourSummary Plan Description or ask your HRdepartment.

Oxygen: Amounts paid for oxygen or oxygen equipmentto relieve breathing problems caused by a medicalcondition are reimbursable.

Parking: See Transportation.

“Patterning” exercises: See Therapy, physical.

Pediatrician’s fees are reimbursable expenses.

Personal use items: Items that are ordinarily used for personal, living, and family purposes are notreimbursable unless they are used primarily toalleviate a physical or mental defect or illness. Forexample, the cost of a wig purchased at the advice of a physician for the mental health of a patient who haslost all of his or her hair from disease is reimbursable.

If an item purchased in a special form primarily toalleviate a physical defect is one that in normal form isordinarily used for personal, living, or family purposes,the cost of the special form in excess of the cost of thenormal form is reimbursable. Also see Braille books and magazines.

Physical exams are generally reimbursable, except foremployment-related physicals.

Podiatrist’s fees are reimbursable expenses.

Pregnancy termination: Medical expenses associated withthe termination of a pregnancy, including legal abortionare reimbursable.

Prescription drugs: See Medicines.

Private hospital room: The extra cost of a private room is reimbursable.

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Health care FSA easy reference listSpecial Schools, Smoking Programs, Special Foods, Transplants …

Prosthesis: See Artificial limb.

Psychiatric social worker’s fees: Expenses incurred forrecommendation of an individual’s specific treatment by psychiatrist are reimbursable.

Psychiatrist’s fees for individual counseling arereimbursable expenses. Family counseling is not aneligible expense unless verified by a doctor’s writtenstatement of medical necessity for the treatment of a medical condition. Marriage counseling is not aneligible expense.

Psychoanalysis: Medical costs associated with individualpsychoanalysis, even if it fulfills requirement foradmission to a school of psychoanalysis training, arereimbursable. See Psychiatrist’s fees.

Psychologist’s fees for individual counseling are reimbursable expenses. See Psychiatrist’s fees.

Psychotherapist’s fees for individual counseling are reimbursable expenses. See Psychiatrist’s fees.

Radial keratotomy: See Laser eye surgery.

Reasonable and customary charges, amounts in excess of:Medical expenses in excess of the plan’s reasonable andcustomary charges are reimbursable.

Schools, special: Expenses paid to a special school for aperson who is mentally impaired or physically disabledare reimbursable if the main reason for using the schoolis its resources for treating the disability. This includesa school that:• teaches Braille to a child who is visually-impaired;• teaches speech-reading or American Sign Language

to a child who is hearing-impaired; or• provides remedial language training to correct a

condition caused by a birth defect.

The cost of meals, lodging and ordinary educationsupplied by a special school is reimbursable only if themain reason for using the school is its resources fortreating the mental or physical disability. The cost ofsending a non-disabled child with behavioral problemsto a special school, though the child may benefit fromthe course of study or discipline, is not reimbursable.See also Learning disabilities.

Sexual inadequacy and incompatibility treatment: Expensesfor counseling provided to a husband and/or wifeconducted by a psychiatrist are reimbursable.

Smoking program: The cost of a program to stop smokingfor the improvement of general health is reimbursable,if doctor prescribed.

Special foods: The costs of special foods and/or beverages— even if prescribed — that substitute for other foodsor beverages which a person would normally consumeand which satisfy nutritional requirements (such as theconsumption of bananas for potassium, for example) arenot reimbursable. However, prescribed special foods orbeverages are reimbursable if they are consumedprimarily to alleviate or treat an illness or disease, andnot for nutritional purposes. Special foods and beveragesare reimbursable only to the extent that their cost isgreater than the cost of the commonly available versionof the same product.

Sterilization: Cost of a legal sterilization (operationperformed to make a person unable to have children) isreimbursable. See Vasectomy.

Student health fee: No, if fee is simply the cost ofbelonging to the program–such fees aren’t reimbursedbecause they are generally premiums for medical care.They may be reimbursable if the expenses areseparately broken down and are for specific medicalservices.

Substance abuse: See Alcoholism and drug abuse.

Telephone: The costs of purchasing and repairing specialtelephone equipment that allows a person who ishearing-impaired to communicate over a regulartelephone are reimbursable.

Television: The cost difference between speciallyequipped television set in excess of the cost of the samemodel regular set. (Refer to capital expenses.)

Therapy, physical: Amounts paid for therapy received asmedical treatment are reimbursable. Payments made toan individual for special exercises administered to achild who is mentally retarded are also reimbursable.These “patterning” exercises consist mainly ofcoordinated physical manipulation of the child’s armsand legs to imitate crawling and other normalmovements. See Mental health.

Transplants: Payments for surgical, hospital, laboratoryand transportation expenses for a prospective or actualdonor of an organ are reimbursable.

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Healthcare FSA easy reference listTransportation Expenses, Vasectomy, Weight Loss Programs …

Transportation: Amounts paid for transportation primarilyfor, and essential to, medical care are reimbursable(except as provided below). These include:• bus, taxi, train or plane fare, or ambulance service;• parking fees and tolls;• transportation expenses of a parent who must

accompany a child who needs medical care;• transportation expenses of a nurse or other person

who can give injections, medications or othertreatment required by a patient who is traveling toget medical care and is unable to travel alone; and

• transportation expenses for regular visits to see adependent who is mentally ill if these visits arerecommended as a part of treatment.

Mileage to and from medically necessary trips arereimbursable at a flat rate of 14 cents per mile. The costof tolls and parking may be added to this amount.

Reimbursable expenses do not include:• transportation expenses to and from work, even if a

medical condition requires an unusual means oftransportation; or

• transportation expenses incurred if, for non-medicalreasons, a participant chooses to travel to anotherlocation (or to a resort or spa) for an operation orother medical care prescribed by a doctor.

Trips: Amounts paid for transportation to anotherlocation, if the trip is primarily for and essential toreceiving medical services, are reimbursable. A trip or vacation taken for a change in environment,improvement of morale or general improvement ofhealth, is not reimbursable, even if it is taken at theadvice of a doctor.

Tutor’s fees: See Learning disabilities.

Vacation: See Trips.

Vaccines: Expenses for vaccines are reimbursable.

Vasectomy: Expenses for vasectomy are reimbursable.See Family Planning, Sterilization.

Vision care: Optometry services and medical expensesfor eyeglasses and contact lenses needed for medicalreasons are reimbursable. Eye exams and expenses for eyeglasses and contact lens solutions are also reimbursable. However, clip-on sunglasses andpremiums for contact lens replacement insurance are not reimbursable.

Vitamins: No, if they are used to maintain general health.Yes under narrow circumstances, if recommended by aphysician for a specific medical condition. Because thisis a dual-purpose item, a physician’s note with the claimevidencing that the pills are used to treat a specificmedical condition is required.

Weight loss program: The cost of a weight loss programfor general health is not reimbursable even if a doctorprescribes the program. However, if attendance at aweight loss program is prescribed by a physician totreat a medical illness (e.g. heart disease), the expenseshould be reimbursable after the service takes place.The physician must substantiate the necessity of thistreatment and must be included with the claim.

Wheelchair: Amounts paid for a wheelchair used mainlyfor the relief of sickness or disability, and not just toprovide transportation to and from work, arereimbursable. The cost of operating and maintainingthe wheelchair is also reimbursable.

X-rays and X-ray treatments: Amounts paid for X-rays andX-ray treatments for medical reasons are reimbursable.

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Capital expenses

Medical expenses incurred by participants for specialequipment installed in the home or for improvementsare reimbursable if their main purpose is medical care.The cost of permanent improvements that increase the value of the property may be partly deducted as a medical expense. The cost of the improvement isreduced by the increase in the value of the property;the difference is a reimbursable medical expense. If the value of the property is not increased by theimprovement, the entire cost is reimbursable as amedical expense.

Improvements made to accommodate a residence for aperson’s disability do not usually increase the value ofthe residence, and the full cost is usually reimbursable.These improvements include, but are not limited to:ramps, widening doorways and hallways, installing railsand support bars in bathrooms, lowering cabinets in thekitchen, moving electrical outlets and fixtures, installingporch lifts (but generally not elevators), modifyingstairways, adding handrails and grab bars, modifyinghardware on doors and re-grading the ground toprovide access to the residence.

Insurance premiums

NOTE: Insurance premiums paid through your employer’s plans areautomatically reimbursed through the Automatic Pre-tax EmployerPremium Account and should not be added to the Health CareFlexible Spending Account for reimbursement.

Insurance premiums are never eligible to bereimbursed through a health care FSA.

Insurance premiums are eligible to be reimbursedthrough an “Outside Premium ReimbursementAccount,” if the employer sponsors this separate andspecialized type of account. Expenses eligible to be reimbursed through an “Outside Premium Reimburse-ment Account” include personally paid, eligible healthinsurance premiums and COBRA health insurancepremiums from a previous employer. Premiums noteligible for reimbursement include premiums paid to aspouse’s employer and COBRA life insurance premiums.

Expenses not eligible for reimbursement

This is a partial list of health care expenses that are not eligible for reimbursement from your health careflexible spending account.

Breast pump

Contact lenses, glasses and sunglasses that are non-prescription

Contact lens replacement insurance

Cosmetic surgery, procedures, prescriptions

Dancing or swimming lessons

DNA collection

Domestic help fees of a non-medical nature

Ear piercing

Electrolysis or hair removal

Funeral expenses

Health club memberships/fitness programs, Exercise equipment

Life insurance premiums

Long-term/Lifetime care insurance premiums

Marriage counseling

Massage (unless prescribed by a physician to treat a medical condition)

Medical Savings Accounts

Medicare Part A and/or B

Over-the-counter drugs that are for general health purposes,cosmetics, skin care, toiletries, hygiene products

Over-the-counter vitamins, supplements or dietary supplements

Personal use expenses (i.e. toothbrushes, electric toothbrushes,clothing, home items, pillows, etc.)

Physical therapy treatments for general well-being

Scientology “audits”

Surrogate expenses

Supplements/Herbal treatments prescribed by an alternativeprovider (e.g. naturopath, homeopath, accupuncturist,chiropractor, etc.)

Teeth whitening/Bleaching

Union dues

Vision discount programs or breakage coverage

Healthcare FSA easy reference listDisability Accomodations, Insurance, and What’s Not Covered …

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