City Colleges of Chicago 2013 Flexible Spending Account (FSA) Open Enrollment

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1 City Colleges of Chicago 2013 Flexible Spending Account (FSA) Open Enrollment Monday, November 26, 2012 Monday, December 10, 2012 Mark your Calendars. Enrollment Forms are Due Monday, December 10, 2012!

2 City Colleges of Chicago 2013 Open Enrollment: November 26 December 10, 2012 Open Enrollment is the time of year when you can elect to participate in a Health or Dependent Care Flexible Spending Account (FSA). If you wish to enroll for the 2013 plan year, you will need to complete a 2013 enrollment form. Your 2012 FSA elections will not automatically be continued for calendar year IRS regulations require that you re-enroll in the FSA accounts each year. To learn more about how FSA accounts can save you significant tax dollars, carefully read the following information. Flexible Spending Accounts (FSA) FSA The Health and Dependent Care Flexible Spending Account (FSA) helps you save money on your out-of-pocket family health and child care expenses. FSA accounts are exempt from federal income taxes, state income taxes and Medicare taxes. When you use the money in your FSA accounts, you avoid paying taxes on those dollars. Depending on your tax bracket, you could save up to 30% or more on your out-of-pocket expenses. However, expenses reimbursed from your Health FSA cannot also be claimed as a tax deduction on your income tax return. Expenses reimbursed from your Dependent Care FSA cannot be used for a child care tax credit on your income tax return. In addition, your dependent care expenses must meet all of the IRS regulations for qualified dependent care expenses shown on page 8. Therefore, you may wish to consult a tax advisor before enrolling in the FSA accounts. FSA Contributions Your Health and Dependent Care FSA contribution elections for 2013 must remain in effect for the entire calendar year. IRS regulations do not allow you to discontinue or change your contributions during a plan year unless you have a change in family status, such as marriage, divorce, birth or death. And, the FSA contribution changes you make must be consistent with the type of family status change. Proof of the family status change is required. Enrolling in the Health FSA To determine your Health FSA contribution for 2013, you will first need to determine the medical, dental and vision services you or your family members expect to receive from January 1, 2013 to December 31, Then you will need to calculate the benefits you expect to receive from City Colleges and other insurance plans. If the total amount expected not to be reimbursed under your insurance plans is greater than $2,500, you must reduce it to $2,500 the annual plan maximum. This amount will be deducted on a pre-tax basis from your paychecks in equal amounts each pay period. Please note that the pre-tax premiums you pay for medical, dental and vision coverage are not eligible expenses since you receive a tax benefit on them when they are deducted from your pay. A list of eligible Health FSA expenses is shown on page 7. For a list of eligible over-the-counter medications and documentation required to claim these expenses, contact PayFlex at (800) A worksheet you can use to help estimate your expenses can be found on the City Colleges web site at 2

3 Flexible Spending Accounts (FSA) Cont. Enrolling in the Dependent Care FSA To determine your Dependent Care FSA contribution for 2013, you will need to calculate how much your child care provider will charge from January 1, 2013 to December 31, If this total is greater than $5,000, you must reduce it to $5,000 the annual plan maximum. This amount will be deducted on a pre-tax basis from your paychecks in equal amounts each pay period. Your dependent care expenses must meet all of the IRS regulations shown on page 8. A worksheet you can use to help estimate your expenses can be found on the City Colleges web site at Submitting a Claim Qualified health and dependent care expenses incurred from January 1, 2013 to December 31, 2013, will be eligible for reimbursement from your FSA accounts. If you have questions about whether an expense is eligible for reimbursement or the documentation required to claim expenses, you can contact PayFlex at (800) Please note that a prescription has been and will continue to be required for any over-the-counter drug or medicine purchased on or after January 1, 2011, in order to be reimbursed. You can submit an online claim reimbursement by registering on and using Express Claims, or by completing a paper claim and sending it to PayFlex by fax or mail. Once registered, you can also elect to receive online notification of claim receipt and processing as well as view your account balance and claims history. Eligible claims will be reimbursed weekly by PayFlex. You can choose to receive your reimbursement by check or direct deposit into your bank account. To have your reimbursements deposited directly into your checking or savings account, complete a Direct Deposit Authorization Form and submit it directly to PayFlex. If you are enrolled in the City Colleges BlueCross BlueShield PPO Plan, you can authorize BlueCross BlueShield to notify PayFlex of your out-of-pocket PPO expenses for automatic reimbursement from your Health FSA to avoid submitting claims. Simply select the FSA Crossover ( Claim Submission ) Authorization Form link on the City Colleges web site and submit the authorization form with your FSA enrollment form. To obtain the FSA claim form, direct deposit form or crossover claim submission form as well as instructions on how to register your account on the PayFlex participant web site, contact PayFlex at (800) or visit the City Colleges web site at Please note, the crossover claim submission form is for PPO members only. 3

4 Flexible Spending Accounts (FSA) Cont. Submitting a Claim Cont. You will have from January 1, 2014 to March 31, 2014 to submit claims for health and dependent care expenses incurred during calendar year During this 2013 plan year claims run-out period, PayFlex will reimburse any remaining 2013 claims as well as any 2014 grace period claims (incurred from January 1, 2014 to March 15, 2014). The 2014 grace period claims will be reimbursed first from your 2013 FSA account balances until they are depleted, and then from your 2014 FSA accounts if you are re-enrolled for the 2014 plan year. Therefore, only the remaining reduced 2013 plan year balances will be forfeited instead of the original balances as of December 31, Forfeitures and the IRS Grace Period Although you gain substantial tax savings by using the FSA accounts, the IRS requires that any unused year-end account balances must be forfeited. However, FSA expenses incurred during the 2-1/2 month grace period following the plan year can be reimbursed from the previous year s FSA balance. In order to take advantage of the grace period, you must be an active plan participant on the last day of the plan year. You don t need to re-enroll in the FSA accounts for the following plan year to take advantage of the grace period For example, if you had a $500 Health FSA balance as of December 31, 2013, this $500 balance would be available for reimbursing expenses incurred from January 1, 2014 to March 15, 2014 (the 2-1/2 month grace period) as long as you submitted them by March 31, 2014 the last day of the 2013 plan year claims run-out period. Here s how it will work. During the 2013 plan year claims run-out period from January 1, 2014 to March 31, 2014, PayFlex (the FSA claims administrator) will reimburse any remaining 2013 claims as well as any 2014 grace period claims (incurred from January 1, 2014 to March 15, 2014). The 2014 grace period claims will be reimbursed first from your 2013 Health FSA balance until it is depleted, and then from your 2014 Health FSA account if you are re-enrolled for the 2014 plan year. Therefore, only the remaining reduced 2013 plan year balance will be forfeited instead of the original balance as of December 31,

5 Flexible Spending Accounts (FSA) Cont. Termination or Retirement During 2013 If your employment terminates before December 31, 2013, you will have 90 days following the end of the plan year (December 31, 2013) to submit claims for eligible expenses incurred through your termination date. Under COBRA, you may also elect to continue contributions to your Health FSA (if you have a remaining balance in your account) through the end of the plan year on an after-tax basis (by personal check each month). For more information contact PayFlex or the District Office of Human Resources, Benefits Division. If you will retire prior to December 31, 2013, you will have 90 days following the end of the plan year (December 31, 2013) to submit claims for eligible expenses incurred through your retirement date. Before you do anything, please note the following: If you want to participate in the Health or Dependent Care FSA, you will need to complete a new enrollment form. Your 2012 FSA elections will not automatically be continued for calendar year IRS regulations require that you re-enroll in the FSA accounts each year. Unused Health or Dependent Care FSA account balances must be forfeited under IRS regulations. Therefore, be sure to carefully estimate your expected health and dependent care expenses before you submit your enrollment form. Worksheets you can use to help estimate your 2013 health and dependent care expenses can be found on the City Colleges web site at Enrollment forms are available: At the open enrollment meeting scheduled at each location At the Internet link, under 2013 Benefits Open Enrollment From your Human Resources Administrator at your college From the District Office of Human Resources, Benefits Division. Completed Enrollment forms are due by Monday, December 10, 2012 Send to: City Colleges of Chicago Human Resources, Benefits Division 226 West Jackson Blvd., 12th Floor Chicago, IL

6 Eligible Health Expenses The following are examples of medical, dental and vision care expenses that are eligible for reimbursement under your Health FSA. For additional information, please refer to IRS Publication 502 or contact the PayFlex Customer Service Center at (800) (A) (H) Stop-smoking programs Acupuncture Health institute Surgical fees (for legal Alcoholism treatment Hearing aids & batteries operations not cosmetic Ambulance service Hospital services in nature) Artificial limb/teeth (I) (T) (B) Insulin & syringes Therapy, physical or Bandages, band-aids and wraps (J) speech Breast-reconstructive surgery (K) Transplants (donor following mastectomy (L) expenses, if you pay those Birth control pills Laboratory fees expenses) Braille books and magazines Lead-based paint removal (U) (C) (M) (V) Chiropractor professional fees (N) Vasectomy Christian Science Practitioner Nursing home (W) fees Nursing services Weight-loss program Co-insurance, co-pay amounts (O) (only if medically necessary & deductibles Orthodontia to treat existing disease, Contact lenses Orthopedic devices such as heart disease & Contraceptives Osteopath fees undertaken under Crutches Oxygen equipment physician s) (D) (P) Wheelchair Dental treatment Physical therapy Wigs (if purchased Drug dependency treatments Pregnancy test kits upon advice of physician (E) Psychiatric care (for medical for mental health of Eye surgery reasons) patient) Eyeglasses, prescription Psychologist fees (X) (F) (Q) X-ray fees Fertility treatments (R) (Y) (G) Flu shots (S) (Z) Guide dog or other animal used to assist persons with physical disabilities Special schools & education (for mentally impaired or physically disabled person) Sterilization procedures 6

7 IRS Requirements for a Dependent Care FSA Under IRS regulations, eligible expenses under a Dependent Care FSA must be incurred for the care of your dependent child so that you and your spouse (if any) can work. Under certain circumstances, this account can also be used to pay for the care of elderly parents, or a disabled spouse or dependent. An eligible dependent is an individual who spends at least 8 hours a day in your home and is one of the following: Your dependent under age 13 for whom you can claim an exemption A child under the age of 13 for whom you have custody if you are divorced or legally separated Your spouse who is physically or mentally incapable of self-care Your dependent who is physically or mentally incapable of self-care. Your elderly parent(s) who is (are) incapable of self-care. In addition, you must also meet one of the following eligibility criteria: You are a single parent or guardian You have a working spouse or a spouse looking for work Your spouse is a full-time student at least 5 months during the year while you are working Your spouse is physically or mentally unable to provide for his/her own care You are divorced or legally separated and have custody of your child. (Even if your former spouse may claim the child for income tax purposes, your FSA can be used to pay for child care services provided during the period the child resides with you.) And finally, expenses may be reimbursed for services provided: Inside or outside your home by anyone other than your spouse, a person you list as your dependent for income tax purposes or one of your children under the age of 19 In a dependent care center or a child care center. (If the center cares for more than 6 children, it must comply with all applicable state and local regulations.) By a housekeeper whose services include, in part, providing care for a qualifying individual Through child or adult day care; through nursery, preschool, after-school, or summer day camp programs. Taxes you pay on wages for eligible dependent care can also be reimbursed. By a provider who doesn't intend to claim the income as earnings. The provider's Social Security or Tax ID number and payment/services details must be included with your federal income tax return on Form (As a result, your provider will have to pay taxes on that income.) Ineligible expenses include dependent care for a child 13 or over, overnight camp, baby-sitting that is not workrelated, schooling in kindergarten and higher grades, and long-term care services. A complete listing of eligible and ineligible dependent care expenses is available on the PayFlex web site at For additional information, please refer to IRS Publication 503 or contact the PayFlex Customer Service Center at (800)