If you re one of the many people who spend money on medical expenses, day care for

Transcription

1 AMERIFLEX Your Key to Savings F S A E N R O L L M E N T K I T A Plan That Enhances Your Benefits If you re one of the many people who spend money on medical expenses, day care for dependents, or parking and transit, a Flexible Spending Account (FSA) Medical, Dependent Day Care, or Commuter can make these expenses more affordable. One or all of these valuable benefits are available through your employer s flexible benefits plan. Every year more than 48 million employees nationwide enroll in a FSA program.

2 2 E N R O L L M E N T K I T TABLE OF CONTENTS The information in this kit is presented for informational purposes only and is not intended as legal, tax, accounting, or other professional advice. Individuals concerned about their own individual tax situation are encouraged to consult with a professional advisor. Furthermore, the information in this kit is also subject to change at any time as laws and regulations change. Click on half-moon tabs on any page to return to the Table of Contents. How the AmeriFlex Plan Works Eligible Expenses Funding Your Account Claims Process The AmeriFlex Convenience Card FSA Election Changes Tax Implications Enrollment Form AmeriFlexRX AMERIFLEX

3 3 How the AmeriFlex Plan Works If you participate, you will elect to have a specified amount of pre-tax money deducted from your paycheck each pay period. These dollars are subtracted from your gross earnings before taxes and put into a Flexible Spending Account to cover eligible out-of-pocket costs. Once you submit a claim for a qualified expense, you will be reimbursed from this account. Lower your taxable income; pay less tax; increase your take-home pay. Participation is the equivalent of getting a raise. The following table illustrates how you save by participating in a Flexible Spending Account: Without This Plan With This Plan Gross pay (annual) $30, Gross pay (annual) $30, Tax Withholding $ 7, Eligible expense $ 1, Take-home pay $22, Taxable income $29, Eligible expense $ 1, Tax Withholding $ 7, New take-home pay $21, New take-home pay $21, Result (increased take-home pay) $ The information in this table is for descriptive purposes only and is not intended to reflect your own personal tax situation. Eligible Expenses Medical Spending Account Eligible Expenses A medical FSA is used to pay for healthcare expenses not covered under your medical or other insurance plan. The IRS determines eligible expenses. IRS-qualified expenses may include: Co-pays, deductibles, and other payments you are responsible for under your medical plan Charges that may not be covered by your medical plan such as: Routine exams Dental care Orthodontia (check with your Employer to determine if Orthodontia is allowed in your plan and what reimbursement method is used) Eyecare: Lasik, glasses, contact lenses Hearing aids Well-baby care Miscellaneous expenses such as: Many over-the-counter drugs; e.g., pain relief, sleep aids, allergy treatments Transportation, tolls, and parking to receive medical care Individual psychiatric or psychological counseling Diabetic equipment and supplies Durable medical equipment Qualified medical products or services prescribed by a doctor Some examples of ineligible expenses include insurance premiums, teeth whitening, prescription drugs for male-pattern baldness, and most cosmetic procedures. A more comprehensive list of eligible medical and over-the-counter expenses is available on the AmeriFlex website. AMERIFLEX

4 4 Dependent Day Care Spending Account Eligible Expenses With a Dependent Day Care Account, you can set aside pre-tax payroll deductions to reimburse the expenses associated with day care for your qualified dependents. Eligible expenses must meet the following qualifications: The care of the dependent must enable you and your spouse to be employed. The amount to be reimbursed must not be greater than your spouse s income or your income, whichever is less. The child must be under 13 years old and must be your dependent under federal tax rules. The services may be provided in your home or another location, but not by someone who is your minor child or dependent for income tax purposes (e.g., an older child) If the services are provided by a day care facility that cares for six or more children simultaneously, the facility must comply with state and local day care regulations. Services must be for the physical care of the child, not for education, meals, etc. Qualified dependent care expenses also include costs for the care of a spouse or other adult dependent who lives in your home and is incapable of self-care, has gross income below the exemption amount in IRS Code 151, is dependent on you for over half of their support, and is not anyone else s qualifying child (e.g., an invalid parent). The same rules that apply for child care apply to the care of other dependents, except the dependent need not be under age 13. For more details on dependent day care eligible expenses, reference IRS Publication 503 Child and Dependent Care Expenses, available on the AmeriFlex website. Commuter Reimbursement Account Eligible Expenses Commuter Reimbursement Accounts allow you to set aside pre-tax income to pay for qualified parking, transit, and commuter highway vehicle expenses related to your transportation to and from work. Parking expenses are expenses incurred to park your vehicle on or near the business premises of the employer or expenses incurred to park your car at a location from which you commute to work by (a) mass transit facilities, (b) a commuter highway vehicle, or (c) car-pool. Transit expenses are those incurred for a pass, token, fare card, voucher, or similar item (a pass) for transportation (a) on mass transit facilities, whether or not publicly owned, or (b) provided by a person in the business of transporting persons for compensation or hire if such transportation is provided in a vehicle with a seating capacity of at least six adults (excluding the driver). Commuter highway vehicle (van-pool) expenses are those incurred for transportation in a commuter highway vehicle when traveling between your residence and place of employment. A commuter highway vehicle is any highway vehicle with a seating capacity of at least six adults (not including the driver), and for which at least 80% of the mileage is for purposes of transporting employees between their residence and their places of employment, and where the number of employees is, on average, at least half of the adult seating capacity of the vehicle (not including the driver). AMERIFLEX

5 5 Funding Your Account The maximum amount you can contribute to your FSA depends on the type of account you select. Your employer determines the maximum annual election for your Medical Flexible Spending Account while the government sets the maximum amount for your Dependent Day Care Spending Account and Commuter Reimbursement Account. Determining Account Contributions Medical: Your employer determines the maximum allowable contribution for your Medical Flexible Spending Account. Within that maximum, you determine your contribution for yourself and your eligible dependents based on expenses you expect to incur in the upcoming plan year. Your annual contribution is then divided by your number of pay periods, and that amount will be deducted pretax each pay period. Dependent Day Care: Federal law has set the maximum allowable contribution per calendar year for a Dependent Day Care Spending Account as follows: $5,000 for a married couple filing jointly $5,000 for a single parent $2,500 for a married person filing separately NOTE: While most employers follow the IRS limit for dependent day care plans, some have selected a lower annual maximum benefit. You should check with your employer to determine the limit for your dependent day care plan. Commuter: The maximum amount you may contribute to a Commuter Reimbursement Account is determined by the IRS. These amounts may change annually, so ask your employer for current maximums for parking expenses, transit passes, and commuter highway vehicle expenses. The Use-It-or-Lose-It Rule If you contribute dollars to a reimbursement account and do not use all the money you deposit, you will lose any remaining balance in the account at the end of the eligible claims period. A very important thing to remember is that the rule exists because the IRS has established strict guidelines for plans with tax advantages. Claims Process To be reimbursed for any expense, you must first file a claim. You can file a claim in two ways, either manually or electronically. To file a claim manually, simply complete a claim form and mail or fax it to AmeriFlex along with substantiation of the claim. Acceptable forms of substantiation include itemized receipts and the Explanation of Benefits (EOB) from your insurance carrier. Information required on all claim requests include: the date of service, the product or service description, prescription drug names and numbers, the total dollar amount being requested, the service provider s name, and, in the case of dependent day care requests, the provider s signature and tax ID or Social Security number. When you submit a claim by fax or mail, your reimbursement will either be mailed or directdeposited into your bank account, whichever you prefer. To eliminate the hassles of paper, faxing, and the time delays of mailing, simply use your AmeriFlex Convenience Card. AMERIFLEX

6 6 SMART SIMPLE and Convenient The AmeriFlex Convenience Card The AmeriFlex Convenience Card is a MasterCard debit card providing electronic access to your FSA funds.the card provides the convenience of a single debit card with access to all of your accounts. Your AmeriFlex Convenience Card gives you easy access to the funds in your Flexible Spending Account(s). It works just like any other debit card, but with three important differences: First, its use is limited to specific merchants* and to expenses deemed eligible by your plan. Second, you cannot use it at an ATM or to obtain cash back when making a purchase. Third, you are not given a PIN with this card. Should a merchant or provider ask you for a PIN, simply explain that this card does not require one. If given the option between debit and credit at the terminal, choose credit. *Every merchant that accepts MasterCard is assigned an MCC Code based on their type of business. Only a limited number of these codes apply to merchants providing products or services eligible for FSAs. Use of the AmeriFlex Convenience Card is limited to day care providers; medical care providers such as hospitals, doctors offices, optometrists, dentists, orthodontists, pharmacies, or other merchants providing prescription and over-the-counter eligible products; and CRA merchants such as parking garages or metro-card machines. In other words, your card cannot be used at non-qualified businesses such as gas stations, retailers, convenience stores, etc. For example: aspirin is an eligible expense in your Medical Flexible Spending account; however, you cannot purchase aspirin at your local convenience store because that type of business does not have an eligible MCC code. You would need to purchase your aspirin at your local pharmacy or other qualifying business to use the card. However, under new regulations, if the merchant has an IRS approved inventory management system that provides SKU level data on the item, it can automatically determine if an expense is eligible, eliminating the MCC code restriction. Check with your local retailer to find out if they already have or may be adding this system. AMERIFLEX

7 7 Your Card Account Balance and Transaction Receipts What if there s not enough money in my account? If you charge more than the available balance in your account, the transaction will be denied. You can find your balance online at or by calling the AmeriFlex Interactive Voice Response System, which is available 24/7. Review your account balance regularly to avoid denied charges. Do I need the receipts? Possibly, so please save all of your itemized receipts! For certain expenses, AmeriFlex may need additional information, including receipts, to verify eligibility of the expense and to comply with IRS rules. That s why it s important for you to save all receipts, then fax or mail them promptly if requested. Failure to comply could jeopardize the tax-exempt status of your account and cause the card to be deactivated. FSA Election Changes What if I want to make a change to my FSA Election? The latest set of cafeteria plan regulations develops a process for determining if a participant is allowed to make a change in election during the plan year. A change in status must have occurred and that event must fall into one of the following categories: Change in provider (Dependent Day Care only) Change in cost of day care (Dependent Day Care only) Change in legal marital status Change in number of dependents Change in employment status Change in work schedule (increase or decrease in hours) Dependent satisfies (or ceases to satisfy) requirements for eligibility The election change must be consistent with the status-change event. A change is consistent with the event for Medical Flexible Spending Accounts if the following occurs: The employee, spouse, or dependent is gaining or losing eligibility for health coverage. The election change corresponds with that gain or loss of coverage. For Commuter Reimbursement Accounts, elections can be made for a period as short as one month. Check with your human resources department to see how often you can change your CRA election. Employee Termination/Claims Procedure AmeriFlex will deactivate the terminated employee s AmeriFlex Convenience Card on the date notified of the termination. Any eligible expenses incurred, and not yet submitted for reimbursement, prior to or on the date of termination, must be filed using a manual claim form and must be received by AmeriFlex within 90 days of the termination date. AMERIFLEX

8 8 AmeriFlexRX Leverage the purchasing power of your FSA even further with AmeriFlexRx. Even better, orders of $15.00 or more are shipped for FREE, specially priced items provide extra savings, and all orders are shipped within two business days. And now... maximize your convenience, save time, and start shopping! Two Assets That Work Even Better IN TANDEM We ve enhanced the purchasing power of the AmeriFlex Convenience Card by providing AmeriFlexRx, the AmeriFlex online drugstore. Convenient 24/7 access Even deeper discounts with AmeriFlexRx Value Brand Free shipping on orders over $15.00 Items are shipped within two business days AMERIFLEX

9 9 Tax Implications Will pre-taxing have an impact on Social Security benefits? Reductions in your taxable pay may lead to a reduction in Social Security benefits; however, for most employees, the reduction in Social Security benefits is insignificant when compared to the value of paying lower taxes now. Dependent Day Care Tax Filing On your tax return you must report the correct name, address, and taxpayer identification number (TIN) of your dependent care provider. If your dependent care provider is exempt from federal income taxation, you are not required to report the TIN; however, you must report the correct name and address of the exempt provider and write tax-exempt in the space provided for the TIN. Tax Credits vs. Dependent Care Spending Accounts If you participate in a Dependent Care Spending Account, you cannot claim credits on your income tax return for the same expenses. Also, any amount reimbursed under this plan will reduce the amount of other dependent care expenses that you can claim for purposes of tax credits. Before you enroll in a Dependent Day Care Account, evaluate whether the federal income tax credit or the Dependent Care Spending Account is best for you. Refer to the following federal tax forms and publications for more information (available at Form 2441 (Child and Dependent Care Expenses) Form 1040 Schedule EIC and IRS Publication 596 (Earned Income Credit) Form 8812 and IRS Publication 972 (Child Tax Credit) Frequently Asked Questions AMERIFLEX

10 10 AMERIFLEX FLEXIBLE SPENDING ACCOUNT ENROLLMENT FORM Company Name: Employee Name: Telephone: Employee Address: City: State: Zip: Employee Social Security Number: Plan Year: through Date of Birth: Date of Hire: Effective Date: The Company and I hereby agree that my cash compensation will be redirected by the amounts set forth below for each pay period during the plan year (or during such portion of the year as remains after the date of this agreement). I understand that if I do not return this form to my employer by my effective date, it shall constitute my election to waive participation in all flexible spending programs under my employer s Flexible Benefits Plan and therefore cause me to pay non-reimbursable medical, dependent care, and/or commuter expenses (if any) with aftertax dollars. EMPLOYEE S FLEXIBLE BENEFIT PER PAY DEDUCTION/ALLOCATION Medical Flexible Spending Account $ Maximum ANNUAL contribution Dependent Care Spending Account $ Maximum ANNUAL contribution Commuter Reimbursement Account PARKING $ Maximum MONTHLY contribution TRANSIT $ Maximum MONTHLY contribution Per pay contribution $ Annual contribution $ Per pay contribution $ Annual contribution $ Per pay contribution $ Annual contribution $ Per pay contribution $ Annual contribution $ Date of first payroll Number of remaining pays Date of first payroll Number of remaining pays Date of first payroll Number of remaining pays Date of first payroll Number of remaining pays I UNDERSTAND THAT: (1) My accounts will not automatically renew. During each annual open enrollment period, I understand that I must complete a new enrollment form indicating my account contributions for the new plan year. (2) I cannot change or revoke this agreement at any time during the plan year unless I have a change in family status (including marriage, divorce, death of a spouse or child, birth or adoption of a child, termination or commencement of employment of a spouse, or such other events as the Plan Administrator determines will permit a change or revocation of an election). (3) The Plan Administrator may reduce, cancel, or otherwise modify this agreement in the event he/she believes it is advisable in order to satisfy certain provisions of the Internal Revenue Code. This agreement is subject to the terms of the Company s Flexible Benefits Plan, as amended from time to time, which shall be governed under applicable laws, and revokes any prior agreement relating to such plan(s). By signing this form I agree to the terms and procedures listed herein. I was given the opportunity to participate in this Flexible Benefits Plan, and I have decided not to participate at this time. Employee Signature Date AMERIFLEX 302 FELLOWSHIP RD., SUITE 100, MOUNT LAUREL, NEW JERSEY CALL TOLL-FREE: FLEX (3539) FAX:

11 11 AMERIFLEX FSA ENROLLMENT/continued ADDITIONAL CARDS (only applicable if your employer has chosen this option) If you wish to have an AmeriFlex Convenience Card issued for a spouse or dependent, please be sure your spouse or dependent meets the IRS eligibility guidelines below: (1) For federal tax purposes, a spouse is defined as... a person of the opposite sex who is a husband or wife. Same sex domestic partners are not considered spouses for purposes of FSA administration. A person residing in the employee s home, who the employee provides over half of their support, who is not the employee s spouse under applicable state law, and who is not a family member, is considered a dependent under Internal Revenue Code 152(a) without regard to 152(b)(1), (b)(2), and (d)(1)(b). (2) For purposes of Medical FSAs, dependent includes any relative of the participant for whom the participant provides over half of their support for the calendar year. A relative includes children, parents, stepchildren, siblings, aunts, uncles, cousins, and in-laws of the participant. Relatives do not need to reside with the participant in order to be dependents, nor do they need to be a certain age or infirmity; they need only to be persons for whom the participant has provided over half of their support. Spouse Name: Address to issue card: Telephone: Soc. Sec. Number: Date of Birth: All dependents must be over the age of 18 in order to receive the AmeriFlex Convenience Card. Dependent Name: Address to issue card: (if different from participant) Telephone: Soc. Sec. Number: Date of Birth: Dependent Name: Address to issue card: (if different from participant) Telephone: Soc. Sec. Number: Date of Birth: Each AmeriFlex Convenience Card is issued for a term of three years. Remember that existing cardholders will not receive a new card (unless the current card is scheduled to expire). Cards will simply be reloaded for the next plan year with your new election. Upon expiration, AmeriFlex will automatically issue new cards to participants who re-enroll in the new plan year. For new participants, your AmeriFlex Convenience Card will be sent to your home adress in a plain white envelope. AUTHORIZATION AGREEMENT FOR ACH DEBITS/CREDITS I, hereby, authorize AmeriFlex, LLC, hereafter called ADMINISTRATOR, to initiate debits and/or credits to or from my bank account indicated below at the depository financial institution named below, hereinafter called DEPOSITORY, and to debit and credit the same to such account with the agreement that the only debits to be made will be for the sole purpose of correcting a prior FSA reimbursement error. I acknowledge the origination of ACH transactions to or from my account must comply with the provisions of U.S. law. Depository Name: Account Name: City: State: Zip: Routing Number: (always nine digits) SELECT ONE: Checking Account Savings Account If you would prefer, please attach a voided check. Account Number: CHECK EXAMPLE ROUTING NUMBER ACCOUNT NUMBER CHECK NUMBER The authorization is to remain in full force and effect until the ADMINISTRATOR has received written notification from the employee named above of the termination in such time and in such manner as to afford the ADMINISTRATOR and DEPOSITORY a reasonable opportunity to act on it. Date: Signature: Upon receipt, the Federal Reserve requires 14 business days to perform the initial approval of the ACH information. After this time, AmeriFlex will be directly depositing all claim reimbursements into the bank account provided two days after every processing date determined by your employer. It may take up to 5 business days to have your reimbursements appear in your account, depending upon the automated clearing house utilized by your bank. We suggest that you contact your bank to confirm when these funds become available in your account. AmeriFlex shall not be responsible for any checks or other debt payments you make whereby you have assumed these funds are available. AMERIFLEX 302 FELLOWSHIP RD., SUITE 100, MOUNT LAUREL, NEW JERSEY CALL TOLL-FREE: FLEX (3539) FAX:

12 C O N T A C T I N F O R M A T I O N 24/7 INTERACTIVE VOICE RESPONSE (IVR): (option 2, option 2 for automated account balances and claims status) TOLL-FREE PHONE: (8:30 a.m. to 8:00 p.m. E.S.T.) WEB: (select Employees from the Flex menu and then view your account activity) CUSTOMER SERVICE: service@flex125.com FAX: MAIL: 302 Fellowship Rd., Suite 100, Mount Laurel, NJ 08054

13 AMERIFLEX 302 Fellowship Road, Suite 100, Mount Laurel, New Jersey Toll-free: FLEX (3539) OTC FAQ CHANGES TO OTC Rules Frequently Asked Questions QUICK REFERENCE GUIDE Background: On March 23, 2010, President Barack Obama signed into law a massive piece of legislation aimed at reforming the nation s health care system. The new law, called the Patient Protection and Affordable Care Act (PPACA), contains numerous provisions, many of which will not go into effect for several years. An important part of the law, however, will go into effect on January 1, This particular provision changes how health flexible spending account (FSA), health savings account (HSA), and health reimbursement account (HRA) participants are reimbursed for certain types of over-the-counter (OTC) health care expenses. The following FAQ outlines the details of this new provision based upon the guidance that has already been provided by the Internal Revenue Service. Click here < rms/otc2011.pdf> for a one-page summary of the new OTC rule. Questions & Answers: Q/What is the new OTC law? 1 A/PPACA mandates that expenses incurred for OTC medicines and drugs (with the exception of insulin) will not be eligible for reimbursement under a health FSA or HRA unless you have a valid prescription for same. On September 3, 2010, the Internal Revenue Service issued Notice and Revenue Ruling , which explained in some detail how this new rule will work. Some of the information that follows is based on this new guidance. Q/What changes on January 1, 2011? A/As of January 1, 2011, you will need to provide a valid prescription to your pharmacy in order to pay for OTC drugs and medicines with your FSA or HRA debit card. If you instead wish to purchase OTC medicines and drugs out-ofpocket and file for reimbursement with AmeriFlex, you will need to submit a valid prescription with your claim. Q/ What if my health plan year starts in November? Will the rule still apply to me on January 1? A / Yes. The new law goes into effect on January 1, 2011 and will apply to the tax year, not the plan year. So, regardless of when your plan year starts, the rule will apply to you (and everyone else) for all purchases made on or after January 1.

14 AMERIFLEX 302 Fellowship Road, Suite 100, Mount Laurel, New Jersey Toll-free: FLEX (3539) CHANGES TO OTC Rules Frequently Asked Questions QUICK REFERENCE GUIDE Q & A continued Q /What about expenses incurred during the grace period (January 1, 2011 March 15, 2011)? A / The new law goes into effect for everyone on January 1, Regardless of whether you are using 2010 or 2011 funds, the rule will still apply for all expenses incurred after January 1, and you will still be required to follow the new procedure for reimbursement of OTC medicines and drugs. Q / What if I incur the expense before January 1 but do not request reimbursement until after January 1? Will I be required to submit a prescription? A / Any expenses for OTC medicines or drugs incurred before January 1, 2011 will NOT require a prescription for reimbursement even if the claim is made on or after that date. Q / Will I need a prescription to purchase OTC medicines or drugs as of January 1, 2011? A / Only if you want to use FSA or HRA funds to pay for these items. 2 Questions & Answers: Q / Will this new rule affect how I pay for my regular prescriptions? A / No. You will still be able to use your FSA or HRA funds to pay for regular prescription medications with your FSA/HRA debit card (the AmeriFlex Convenience Card), just as you have in the past. You may also continue to use your AmeriFlex Convenience Sleeve to pay for standard prescription items. OTC FAQ

15 AMERIFLEX 302 Fellowship Road, Suite 100, Mount Laurel, New Jersey Toll-free: FLEX (3539) OTC FAQ CHANGES TO OTC Rules Frequently Asked Questions QUICK REFERENCE GUIDE Q & A continued Q/Does this new law apply to HSAs? A/Yes, but because HSAs operate differently than health FSAs or HRAs, the effect on accountholders will be different. Debit cards tied to HSAs will still work for OTC medicines and drugs, but it will be the sole responsibility of the accountholder to have a record of prescriptions for those items. If the accountholder does not have a prescription for OTC medicines or drugs purchased with HSA dollars on or after January 1, 2011, the accountholder must pay the 20% HSA excise tax on ineligible items. Q/What exactly is considered an OTC medicine or drug? A/The IRS did not provide specific guidance regarding what is to be considered a medicine or drug under this new law. Nevertheless, at this time we can be reasonably certain that the following categories of items are considered medicines/drugs and therefore will require a prescription effective January 1, 2011 in order to receive reimbursement from an FSA or HRA: Antacids Allergy and sinus medications Anti-diarrheals Anti-gas Anti itch and insect bites Baby rash ointments and creams Cold sore remedies 3 Questions & Answers: Cough, cold and flu medications Digestive aids Feminine anti-fungal/anti-itch Laxatives Motion sickness medications Pain relievers Respiratory treatments Sleep aids and sedatives Stomach remedies As further guidance is provided, we will share additional details and information with you. Q/What is not considered an OTC medicine or drug? A/At this time, we are reasonably certain that the following categories of items are not considered medicines or drugs under this new rule and therefore will not require a prescription in order to receive reimbursement from an FSA or HRA. You will be able to use your FSA/HRA debit card to pay for these items at a pharmacy or drug store, just as you have in the past: Acne creams Anti-fungal foot medication Antiseptics and wound cleaners Band Aids Condoms Braces and supports Catheters

16 AMERIFLEX 302 Fellowship Road, Suite 100, Mount Laurel, New Jersey Toll-free: FLEX (3539) OTC FAQ CHANGES TO OTC Rules Frequently Asked Questions QUICK REFERENCE GUIDE Q & A continued Denture adhesives Diabetic testing and aids Diagnostic tests and monitors Elastic bandages and wraps Eye care and contact lens supplies Family planning kits Fiber laxatives First aid supplies Hearing aid batteries Infant electrolytes and dehydration solutions Infant teething pain supplies Insulin and diabetic supplies Nebulizers Orthopedic aids Ostomy products Reading glasses Smoking deterrents Syringes Thermometers Wheelchairs, walkers, and canes As further guidance is provided, we will share additional details and information with you. Q/What is the new procedure for reimbursement of these expenses? What do I need to do? A/Beginning January 1, 2011, pharmacy systems will be modified to comply with the new law and your FSA/HRA 4 Questions & Answers: debit card can only be used for the purchase of OTC medicines or drugs if you present a valid prescription for them. In order to get reimbursed from your FSA or HRA for the purchase of these items, you will need to file a manual claim and send it to AmeriFlex along with a copy of a prescription. This will enable us to approve the claim and reimburse you for the amount you spent on the eligible OTC purchase. Remember, all eligible expenses that do not fall under the definition of an OTC medicine or drug will not require any additional paperwork. You will still be able to use your FSA/HRA debit card to pay for these expenses, just as you have in the past. For example, you will still be able to use your FSA debit card to buy Band Aids and contact lens solution because these items are not medicines or drugs, and you will not need to obtain a prescription or file a manual claim after the fact.

17 AMERIFLEX 302 Fellowship Road, Suite 100, Mount Laurel, New Jersey Toll-free: FLEX (3539) OTC FAQ CHANGES TO OTC Rules Frequently Asked Questions QUICK REFERENCE GUIDE Plan Ahead, Save Money Whether you have an FSA, HSA, or HRA, don t forget that many of the expenses for which most participants currently use their accounts will not be impacted by this law. Regular prescriptions, along with many other OTC items that are not considered medicines or drugs, will not be subject to this rule, and you will therefore still be able to pay for these other expenses with your AmeriFlex Convenience Card and without the need to submit a prescription. Additionally, you can still use your AmeriFlex Convenience Card for all other health care-related expenses such as doctor or hospital visits, provided such items are covered under your plan(s). Of course, whether or not you are required to submit paperwork for your health care expenditures, bear in mind that it is always a good idea to save your receipts as proof that your FSA, HSA, or HRA funds were used to pay for an eligible expense under your plan. Although the new law does add another step to the process of getting reimbursed for certain OTC medicines and drugs, planning ahead to obtain a doctor s prescription and submitting the extra paperwork that is now required can still save you quite a bit of money in the long run and is therefore still worth the extra effort required under the new law. 5 We Are Here to Help AmeriFlex is here to help you understand and comply with the new rules that will be introduced as part of the health care reform law. As additional guidance is provided by the federal agencies, we will continue to share information with you. In the meantime, please do not hesitate to contact us with any questions that you may have FLEX (3539) Do you want to voice your opinion about the new OTC provision? We understand that the new law is not a welcome change for many of our clients and participants. While we at AmeriFlex intend to do everything within our power to minimize any inconvenience that may result from the new OTC provision, we recognize that you may wish to voice your concerns about how the new law will affect you and your family. Click here: for information on how to share your thoughts with elected officials from your home state.

18 CHANGES TO OTC Rules OVERVIEW/ NEW IN AMERIFLEX 302 Fellowship Road, Suite 100, Mount Laurel, New Jersey Toll-free: FLEX (3539) OTC 2011 Background: On March 23, 2010, President Barack Obama signed into law a massive piece of legislation aimed at reforming the nation s health care system. The new law, called the Patient Protection and Affordable Care Act (PPACA), contains numerous provisions, many of which will not go into effect for several years. An important part of the law, however, will go into effect on January 1, This particular provision changes how health flexible spending account (FSA), health savings account (HSA), and health reimbursement account (HRA) participants are reimbursed for certain types of over-the-counter (OTC) health care expenses. The following is a brief overview of the changes that will occur effective 1/1/2011. Click here < for a more detailed FAQ. Summary of the new OTC law: PPACA mandates that expenses incurred for OTC medicines and drugs (with the exception of insulin) will not be eligible for reimbursement under a health FSA or HRA unless you have a prescription. Effective date: The new OTC law will apply to all purchases made on or after January 1, The new law will apply to the tax year, not the plan year. This means that even if your plan year starts in November 2010, the rule will still apply to you (and everyone else) beginning January 1. New claims reimbursement procedure: Effective January 1, you will be able to use your FSA/HRA debit card to pay for over-the-counter medicines and drugs at pharmacies only if you provide a valid prescription for the OTC medicines and drugs to the pharmacy, which must then follow its usual procedures for prescribed drugs or medicines. Manual Claims: Manual reimbursements for OTC medicines or drugs will require the submission of a valid prescription along with the claim for processing. What is considered an OTC medicine or drug? The IRS did not provide specific guidance regarding what is to be considered a medicine or drug under this new law. Nevertheless, at this time we can be reasonably certain that certain categories of items will be considered medicines/drugs and therefore will require a prescription effective January 1, 2011 in order to receive reimbursement from an FSA or HRA. These include: allergy and sinus medications; cough, cold and flu medications; digestive aids; pain relievers; sleep aids; and stomach remedies. Click here < for a more detailed list. Will this affect the use of my FSA/HRA debit card for other purchases? No. You will still be able to use your FSA/HRA debit card for many common health care expenses that are not considered OTC medicines and drugs under the new law. These include: Band Aids; diabetic testing and aids; eye care and contact lens supplies; first aid supplies; insulin and diabetic supplies; reading glasses; and thermometers. Click here < for a more detailed list. And remember, regular prescriptions will not be subject to this rule, so you will still be able to pay for your prescription drugs with your AmeriFlex Convenience Card just as you have in the past. You will also be able to use your AmeriFlex Convenience Card for doctor and hospital visits, as well as dental and vision care, provided such items are covered under your plan(s). We are here to help: Please feel free to contact us with any questions or concerns that you may have FLEX (3539)

19 ELIGIBLE EXPENSES Quick Reference Guide Locate expense categories and coverage availability (YES/NO/MAYBE). Click on category for link to more detailed guidelines. OTC eligibility information follows in this document. JUMP TO OTC INFO click here AMERIFLEX Acne Medicine/Treatment YES Acupuncture YES Air Conditioning, Air Filter, Purifier, Humidifier MAYBE Alcoholism Treatment YES Ambulance YES Anesthesiology YES Arch Support MAYBE Artificial Insemination MAYBE Artificial Limb YES Artificial Teeth YES Asthma Equipment YES Birth Control YES Birthing Coach NO Bleaching of the Teeth MAYBE Blood Donation YES Braille Books/Magazines YES Breast Augmentation NO Breast Implant Removal MAYBE Breast Pump (Purchase or Rental) MAYBE Breast Reduction MAYBE Capital Expenses MAYBE Car Modifications MAYBE Childbirth Classes (Lamaze) MAYBE Chiropody YES Chiropractors YES Christian Science Practitioner MAYBE Circumcision YES COBRA Premiums NO Collagen Injections MAYBE Contact Lenses, Solutions, and Supplies YES Copays/Coinsurance YES Cosmetic Treatment MAYBE Counseling MAYBE CPR Classes NO Dancing Lessons MAYBE Deductibles YES Dental Treatment YES Denturist YES Dermatology YES Diabetic Equipment/Supplies YES Diagnostic Services YES Diapers/Diaper Service MAYBE Dietitian MAYBE DNA Testing NO Domestic Partners MAYBE Drug Addiction (see Alcoholism) Durable Medical Equipment (DME) YES Ear Piercing NO Educational Classes NO Electrolysis NO Eyeglasses/Supplies (e.g., storage case, replacement cost), Warranties YES Exercise Equipment MAYBE Experimental Drugs YES Fertility YES Flu Shot YES Funeral Expenses NO Guide Dog or Animal YES Gynecologists YES Handicapped Persons (see Schools) Health Club MAYBE Health Screenings YES Hearing Aids YES Holistic/Homeopathy Practitioner MAYBE Hospital Services YES Human Guide YES Hypnosis MAYBE Insurance Premiums NO Laboratory Fees YES LASIK Eye Surgery YES Late Fees Payments NO Learning Disability (see Schools) Legal Fees MAYBE Lifetime Care Advance Payments NO Lodging/Trips MAYBE Marijuana NO Massage Therapy MAYBE Maternity Charges YES Maternity Clothes NO Mattresses MAYBE Meals MAYBE Medical Plan Information YES Medical Services YES Medicines YES Mentally Retarded (Special Home for) MAYBE Mouth Guards YES Neurologist Fees YES Nursing Home MAYBE Nursing Services YES Nutritional Supplements MAYBE Optometrist YES Organ Donor YES Orthodontia YES Orthopedic Shoes YES Over the Counter Medications YES Oxygen YES Parking (see Transportation) Personal Trainers MAYBE Personal Use Items MAYBE Physical Exam for Caregiver NO Physical Therapy YES Prescription Drugs YES Prosthesis YES Psychiatric YES Psychoanalysis YES Psychologist YES Schools, Special MAYBE Smoking Cessation Program YES Speech Therapy YES Sperm Storage MAYBE Stem Cell Storage MAYBE Sterilization YES Substance Abuse (see Alcoholism) Sunglasses MAYBE Swim Therapy MAYBE Taxes YES Telephone MAYBE Telephone Consultation (Physicians Fees) YES Television MAYBE Transplants YES Transportation MAYBE Tuition MAYBE Tutoring MAYBE Umbilical Cord Blood MAYBE UVR Treatments YES Vaccinations YES Vasectomy YES Varicose Vein Surgery MAYBE Weight Loss Drugs MAYBE Weight Loss Programs MAYBE X-ray Fees YES

20 PAGE 2 ELIGIBLE EXPENSES Quick Reference Guide Click to return to page one. Click to jump to OTC info. AMERIFLEX Acne Medicine/Treatments/Yes: Acne medicines and treatments are eligible expenses. Acupuncture/Yes: Fees paid for acupuncture are eligible medical expenses. Air Conditioning, Air Filter, Purifier, Humidifier/Maybe: The cost of these items, if recommended by a physician as treatment for a specific medical condition, is an eligible expense. If the value of the home increases then these amounts are not reimbursable. Alcoholism Treatment/Yes: Payments to a treatment center for alcohol or drug addiction are eligible medical expenses. This includes meals and lodging provided by the center during medical treatment.you may include transportation costs incurred to attend Alcoholics Anonymous (AA) meetings recommended by the attending physician, when submitted with supporting documentation. Ambulance/Yes: Fees for ambulance service are covered. Anesthesiology/Yes: Fees for anesthesiology are covered. Arch Support/Maybe: Qualifies as a medical expense only if prescribed by a physician as treatment and when submitted with documentation supporting a specific medical condition. Artificial Insemination/Maybe: See Fertility Artificial Limb/Yes: Expenses for the purchase of an artificial limb qualify as medical expenses. Artificial Teeth/Yes: You can include in medical expenses the amount you pay for artificial teeth. Asthma Equipment/Yes: Nebulizers or peak flow meters prescribed for treatment of asthma are eligible expenses. Birth Control/Yes: Expenses associated with the purchase of birth control purchased over the counter or prescribed by a doctor are eligible expenses (e.g., IUD, diaphragm, Norplant, condoms). Birthing Coach/No: Expenses associated with a birthing assistant/coach for women in labor are not considered eligible medical expenses. Bleaching of the Teeth/Maybe: See Cosmetic Treatment Braille Books/Magazines/Yes: The cost of braille books and magazines for use by visually impaired persons qualifies as a medical expense. Eligible expenses include only the amounts over the cost of the product in its standard form. Breast Augmentation/No: Expenses related to breast augmentation (such as implants or injections) are not reimbursable because the procedure is considered cosmetic in nature. Breast Implant Removal/Maybe: The removal of breast implants that are defective or are causing a medical problem are reimbursable. Breast Pump (Purchase or Rental)/Maybe: The cost of a breast pump is considered a medical expense if the pump needs to be used to treat a medical condition. Breast Reduction/Maybe: Medical expenses related to breast reduction surgery are reimbursable only if the physician substantiates that the procedure is medically necessary, i.e., to prevent or treat an illness or disease. Capital Expenses/Maybe: Amounts paid for special equipment installed in your home for improvement qualify as medical expenses if there is documentation from a physician that the equipment is mainly needed for or as a result of a specific medical condition. If the capital expenditure increases the value of the property, the excess value is not reimbursable. Improvements made to accommodate a residence for a person s disability do not usually increase the value of the residence, and the full cost is usually reimbursable. Only reasonable costs to accommodate a personal residence for a disabled condition are considered medical care. Additional costs for personal motives, such as for architectural or aesthetic reasons, are not reimbursable. Car Modifications/Maybe: Special hand controls and other special equipment installed in a car for use by a disabled person qualify as medical expenses. Childbirth Classes (Lamaze)/Maybe: Some of the expenses may qualify. Expenses for instructions relating to the birth of the child are eligible for the mother to be. Fees for instruction in topics such as newborn care are not eligible. Expenses for the coach or significant other do not qualify. Chiropody/Yes: Fees paid to a chiropodist (chiropractic foot doctor) for medical care are eligible expenses. Chiropractors/Yes: Fees paid to a chiropractor are eligible. Christian Science Practitioner/Maybe: Fees paid to a Christian Science practitioner are eligible expenses when treatment is rendered for a specific medical condition. Circumcision/Yes: Circumcision is a covered medical expense. This procedure is also covered if performed in the member s home by a rabbi. COBRA Premiums/No: Premiums paid for COBRA benefits are not a covered expense. Collagen Injections/Maybe: Collagen injections are considered to be cosmetic, however, may be covered if medically necessary (e.g., for treatment of severe acne). Contact Lenses, Solutions and Supplies/Yes: Expenses, including shipping and handling incurred for the purchase of contact lenses, qualify if the contact lenses are needed for medical reasons. Amounts paid for contact lens solutions and supplies qualify as medical expenses. Fees paid for eye exams are also eligible. Copays/Coinsurance/Yes: A copay or coinsurance fee qualifies as a medical expense. Cosmetic Treatment/Maybe: Generally, medical expenses paid for unnecessary, i.e., elective, cosmetic treatment are not covered. (This applies to any procedure that is directed at improving the patient s appearance and that does not meaningfully promote the proper functioning of the body or prevent or treat an illness or disease.) Examples of non-covered cosmetic surgery procedures include breast augmentation, chemical electrolysis, face lift, hair transplant, liposuction, and tattoo removal. Expenses incurred for cosmetic surgery necessary to improve a deformity arising from or directly related to a congenital abnormality, a personal injury or a disfiguring disease qualifies as eligible medical expenses. Counseling/Maybe: Amounts paid for counseling which is medically necessary to treat a specific medical or mental illness is covered.marriage counseling and Family counseling are not covered expenses.

21 PAGE 3 ELIGIBLE EXPENSES Quick Reference Guide Click to return to page one. Click to jump to OTC info. AMERIFLEX CPR Classes/No: CPR classes are not considered "medically necessary"; therefore, the expense is not reimbursable under FSA. Dancing Lessons/Maybe: Amounts paid for dancing lessons do not normally qualify as medical expenses. But the expense may qualify if recommended to treat a specific medical condition (such as part of a rehabilitation program after surgery). Deductibles/Yes: Deductibles qualify as medical expenses. Dental Treatment/Yes: Amounts paid for dental treatments qualify as medical expenses. This includes fees paid to dentists for X-rays, fillings, braces, extractions, dentures, caps, crowns, fluoride treatment, implants, etc. In addition, the installation and monthly rental charges for fluoride treatments to home water qualify as medical expenses when prescribed by a physician or dentist. However, the amount should be limited to the cost allocable to the current plan year. Denturist/Yes: Fees paid to a denturist qualify as health care expenses when services are for the treatment of a specific medical condition. Dermatology/Yes: Fees paid to a dermatologist for medical care qualify as medical expenses. Diabetic Equipment and Supplies/Yes: Medical expenses may include amounts paid for the following equipment and supplies for treatment of diabetes; glucose monitor, urine/blood test strips, insulin and syringes and alcohol swabs. Diagnostic Services/Yes: Fees paid for diagnostic services, as prescribed by a physician, are eligible medical expenses. Diapers Diaper Service/Maybe: Amounts paid for adult diapers or a diaper service, qualify as a medical expense if prescribed by a physician to relieve the effects of a specific medical condition. Diaper expenses for handicapped individuals beyond infancy are also covered. Dietitian/Maybe: Fees paid to a dietitian are eligible when referred by a physician for treatment of a specific medical condition. DNA Testing/No: DNA testing for paternal responsibility is not considered an eligible expense. Domestic Partners/Maybe: Medical expenses incurred by domestic partners are usually not eligible for reimbursement from an FSA. Members should consult with their plan sponsors on domestic partner coverage. Drug Addiction See Alcoholism Durable Medical Equipment (DME)/Yes: The cost associated with the purchase or rental of durable medical equipment that is prescribed by a medical practitioner to alleviate or treat a specific medical condition qualifies as an eligible expense. Costs can include: bed wetting alarm, blood pressure kit, chair*, crutches, hearing aids, medical alert equipment, and oral hygiene equipment.*reimbursement is only for the amount that exceeds the cost of a similar or regular product. Letter of medical necessity only needed for items that have a dual purpose (e.g. chair, sheets, oral hygiene equipment). Ear Piercing/No: Expenses associated with ear or body piercing is not eligible medical expenses. Educational Classes/No: Educational classes are not eligible medical expenses (care for a newborn, breast feed, cope with diabetes, etc.). Electrolysis/No: See Cosmetic Treatment Eyeglasses/Supplies (e.g., storage case, replacement cost)/yes: Amounts paid for prescription vision/sports eyewear, supplies (i.e., eyeglasses, goggles, sunglasses) for a medical condition qualify as a medical expense. Fees paid for eye exams are also eligible. Tinting of prescription eyewear qualifies as an eligible medical expense. Exercise Equipment/Maybe: Exercise equipment may be covered when prescribed by a physician as treatment for a specific medical condition. Exercise equipment used for improvement of general health is not covered. Experimental Drugs/Yes: Legal experimental treatments and procedures are eligible. Fertility/Yes: Medical expenses associated with the treatment of infertility, including shots, in vitro fertilization and artificial insemination incurred by the member, are reimbursable. Semen and embryo storage associated with an active attempt to conceive are also eligible for reimbursement. Note: donor expenses incurred by the member (egg donation, sperm donation) are eligible during active treatment only, if expenses are not covered by a medical plan. The cost of an ovulation kit qualifies as an eligible medical expense. Flu Shot/Yes: Flu shots are eligible medical expenses. Guide Dog or Animal/Yes: The cost of a guide dog or other animal to be used by the visually impaired or hearing impaired qualifies as a medical expense. The cost of a dog or other animal trained to assist persons with other physical disabilities can also be covered. Amounts paid for the care of these specially trained animals are also eligible medical expenses. Gynecologists/Yes: Fees paid to a gynecologist for medical care are eligible medical expenses. Health Club/Maybe: Dues paid to a health club, YMCA, YWCA or spas are allowable with documentation from the attending physician stating that the membership expenses are for treatment of a specific medical condition. Reimbursement is only eligible for the individual membership and for the component that is related to a single year. Any dues that carry over to a subsequent year would violate the IRS rule of constructive receipt. Dues paid for steam baths for your general health or to relieve physical or mental discomfort not related to a particular medical condition are not eligible. Dues must be for a new membership, if the participant was already a member before the physicians prescription, it is ineligible. Health Screenings/Yes: See Diagnostic Services Hearing Aids/Yes: The costs of hearing aids and batteries qualify. Holistic Homeopathy Practitioner/Maybe: Fees paid to a holistic or homeopathy doctor are eligible when treatment is provided for a specific medical condition. Hospital Services/Yes: Amounts paid for hospital services that are not covered under a medical plan qualify as medical expenses (e.g., upgrade from semi-private to private room, fees charged for parents to stay with a child, etc.). (Also see Lodging/Trips) Human Guide/Yes: Expenses for a human guide - to take a blind child to school for example are reimbursable. Hypnosis/Maybe: Hypnosis is considered a medical expense when it is prescribed by a physician as treatment for a specific medical or mental condition.