Professional Development Accounts PDA Updated 8/11/11. Patricia Lanoie Blanchette, MD, MPH CEO

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1 Professional Development Accounts PDA Updated 8/11/11 Patricia Lanoie Blanchette, MD, MPH CEO

2 Professional Development Account (PDA) Voluntary on the part of UCERA and the faculty member. PDA option is a benefit allowed by UCERA and a personal choice made by you at the beginning of each fiscal year or beginning of employment until end of fiscal year if employed at mid-year.

3 PDA Professional Dev Acct vs FSA Flexible Spending Acct PDA annual no dollar cap, but must be justifiable. Many choose $5,000. FSA annual $2,500. cap for health care expenses, $5,000. cap for child/dependent care expenses. Both PDA and FSA account are pre-tax and subject to IRS rules. By IRS rules, unused funds in PDA or FSA may not be returned to you.

4 Examples of Allowable PDA Expenses Registration fees for training/conferences/meetings Business travel expenses for your professional development trips (first class is allowed), ex. CME, professional society mtgs, board exams, training on new procedures, etc. Dues to professional organizations; medical licenses Board certification/recertification fees Subscriptions, books, supplies and other items relevant to the medical field Medical Equipment Software that has an exclusive medical use Research assistants compensation (hourly and/or stipend) including Social Security & Medicare expenses. If you choose to pay a research assistant from your PDA, you must receive permission from your department and from UCERA Human Resources. You may not pay a family member as a research assistant.

5 Examples of Non-Allowable Expenses Computer, computing and computer peripherals. Software that can be used for other than business uses. Travel or travel meals for spouse or domestic partner Donations Entertainment

6 Business vs Personal Expenses The overarching rule of thumb is that business expenses are allowed, while personal expenses are not. The distinction between business and personal expenses is in most cases obvious, but areas that may cause confusion are clarified as follows:

7 Office Expense Furniture and other items to improve your UH/ UCERA office are allowed on PDA funds Furniture for your home office is not allowed Furniture and equipment purchased with PDA funds become the property of UCERA.

8 Travel Reimbursement for travel using PDA funds generally follows all of the same rules as the UH and UCERA Travel Policy, with the exception that, for PDA travel: Ø Air travel may be upgraded or at first class if using PDA funds Ø travel advances are not allowed, either to pay an individual or a travel agency Ø boarding passes need not be submitted if airline generated itinerary and cost, including proof of payment, is provided Ø Stopovers for personal business are allowed if proof is provided that stopover was at no additional cost, or if airline-generated estimate of round trip travel for business purposes only is provided. Payment will be made at the lesser amount. Ø rental cars are allowed if justifiable and equal to or less than standard 4- door rate Ø may use the GSA CONUS rates for U.S. mainland, (or DOD or State Dept for Hawaii and international travel) per diem rate for meals & incidentals. Ø If using per diem for meals & incidentals, must use for the entire trip. If using per diem, there is a partial payment for the first and last day of travel. Ø UCERA does not pay for alcohol from any funds

9 FAQs If these funds are intended to support my professional development activities, why are there limitations concerning how the funds are spent and specifications regarding documentation requirements? Isn t it my money? PDAs must be spent in a manner consistent with IRS rules and guidelines and are subject to audit.

10 Why are original, itemized receipts the required documentation for expenses rather than a daily per diem rate reimbursement? o o o o o PDA spending rules must be consistent with other business expense rules or they will become reportable as taxable income. The IRS requires documentation of the date, location, cost, and business purpose of an expense. Most of this is documented by the itemized receipt. Instead of turning in original receipts for travel, you may choose to use the government per diem rates. You may choose to use the per diem rates for hotel/ lodging, and/or meals & incidentals. If you use the per diem rate for hotel/lodging, and/or meals & incidentals, you must use the per diem for that category for the entire trip.

11 Why can t I be reimbursed for child care, for instance, when it is provided for my use during a professional conference? o The IRS does not identify child care as a business expense on the PDA. o However, UCERA does have a dependent care FSA as an optional benefit. o Child care/dependent care expenses might possibly be charged to the FSA. Review this with our HR department.

12 What are the guidelines for dining and beverage expenses? o Meals for employees while away for professional development will be reimbursed, but with limits. o Reimbursement for alcoholic beverages is not provided. o Dining expenses should not be excessive, and be in alignment with the standard per diem rates (determined by location) found on the government website. Meal costs found to be far in excess of the per diem rates will be reimbursed at the per diem rate.

13 What should I do if I lose a receipt or if I cannot obtain an itemized receipt? o In most cases vendors are familiar with the receipt requirement for businesses and will provide a receipt. o Most vendors also have the ability to provide a replacement receipt. o When an online or other purchase is made, where many original receipts may be printed out, the employee will be asked to attest that they will not submit the purchase for reimbursement from any other source. o For those unusual situations where a receipt is not available, documentation of the date, location. Cost, and business purpose of an expense is required to fulfill IRS business expense reporting requirements. Proof of payment, such as a credit card statement, may then help substantiate the expense.

14 Can I submit a receipt for a cup of coffee and a doughnut at the airport? o Yes, if you are traveling for business purposes and are within the per diem guidelines for the area in which you are traveling. Keep the receipt or use per diem.

15 Can a faculty member use the PDA to pre-pay for registration fee, airfare, lodging, and meals for a conference that will occur in the next fiscal year? Yes and No. Yes: You can use your PDA to pre-pay the registration fee if you must do so in a timely manner or to obtain an early bird discount. Be sure to explain why you are pre-paying for something that will occur in a subsequent year. No: UCERA does not allow travel advances, so no prepaying for airfare, lodging, per diem.

16 If a faculty member is going to provide free health care to underserved people in other countries, can they use their PDA to buy medical supplies to donate to treat those people? Wonderful humanitarian service, but donations are not allowed from the PDA.

17 What is the time frame for reimbursements? The IRS guidelines require that submission for reimbursement must be made within 60 days of incurring the expense. This is what the IRS defines as timely submission. For travel, UCERA will consider submission within 60 days of completing travel to be timely submission.

18 Can we use a credit card statement when an original receipt is not available? Use of a credit card statement is usually not sufficient to show enough detail. Receipt must show a description of the item well enough for the finance staff and auditors to determine the business expense of the item. An exception is that UCERA will reimburse up to $75.00/ month for an individual cell phone plan use without requiring detail of calls made. Proof of payment, such as a credit card statement, and the vendor s description of the plan will be sufficient. Anything over $75.00 will require a list of business calls.

19 Why are itemized receipts needed for restaurants? To be sure that UCERA is not paying for alcohol. To ascertain whether this looks like a one-person meal. (no guests or entertainment allowed.) To be sure this is a travel related meal and not a local meal which is not generally allowed. (Meals as a part of a local conference may be permitted as an exception.) It s much easier all around to do away with receipts and use the per diem rate for meals & incidentals when traveling.

20 Are Membership Dues Allowed? Dues are allowed to be paid from the PDA for professional societies related to your field, but not for health club, golf, Lions Club, etc. Dues can be paid in one fiscal year for the next, but not more than one year early. Membership dues late fees are allowed.

21 How about an IPAD? Sorry, not from the PDA. The IRS takes a dim view of computers, computing devices, and computer peripherals on the PDA because they are impossible to show an exclusive business use. If audited, they will be disallowed. Computers, etc, are allowed from UCERA department funds. Must go thru UCERA IT for inventory and to ensure encryption is sufficient.

22 Dinner for Department Faculty? For Departmental Staff? Sorry, not from the PDA. I know this sounds like a business expense, but to the IRS it looks like entertainment, which is not allowed. Up to $50.00 per person may be allowed for department functions IF paid from UCERA department funds. Will need receipt and explanation of the business reason.

23 Textbooks, office supplies, pens, folders, flash drives? All look okay from the PDA with proper receipts, but NOT a flash drive. This is a computer peripheral which is not allowed in a PDA. Flash drive is OK if purchased from dept funds, but only if factory encrypted or password protected, ex. Ironkey.

24 Orthopedic shoes? Arch supports, support hose, shirts, pants, skirts, etc, only worn at work? Sorry, IRS says that any clothing that may be worn for personal use (street wear) is not allowed, even if you only wear them at work or in the OR, etc. Scrubs, white coats, uniforms, are allowed.

25 Rental Car? Yes, up to standard 4-door rate, BUT ONLYIF justified, ex. less expensive than taxi for airport to hotel transfers staying at a less expensive hotel and need car for transport between hotel and conference site A lot of local travel is necessary for the meetings that are held in various places around town Meeting site is at some distance from nearest airport and rental car is cheaper than taxi or car service needed to transport heavy materials and equipment conveniently JUST TELL US WHY

26 So, the PDA Is for your benefit MUST meet IRS rules Airfare not required to be at economy rates, and rental cars do not need to be economy, subcompact. Go first class, upgrade you earned it.