Champlain College Flexible Spending Account Plan

for

Health Care and

Dependent Care Reimbursement

and premium conversion for group health insurance premiums

The Champlain College Flexible Spending Account Plan is a type of “cafeteria plan” authorized by Internal Revenue Code Section 125. Under this Plan you are able to pay for your portion of our group health and dental insurance premiums (and privately purchased health, dental and disability insurance premiums) as well as some of your out-of-pocket health care and dependent daycare expenses with pre-tax dollars.

  1. What are non-taxed (pre-tax) dollars? These are dollars that you have withheld from each paycheck on which you do not pay income taxes or FICA (Social Security) taxes. In return for this tax break, you MUST use this money to pay for insurance premiums and/or out-of-pocket health care and dependent day care expenses.
  1. Premium Conversion Account – You can pay your portion of our group health and vision insurance premiums with non-taxed dollars. This part of the Plan is automatic: upon participation in our group insurance program, you are enrolled in the Plan for payment of your portion of insurance premiums with non-taxed dollars (unless you elect not to participate).
  1. Privately Purchased Insurance Premium Payment - You can pay for your privately purchased (cannot be part of another group plan or purchased through the Health Exchange) health and/or disability insurance premiums with non-taxed dollars.
  1. Health Care Expense Account (Health FSA) – You can pay for non-insured (out-of-pocket) health care expenses for yourself, your spouse and dependent children with non-taxed dollars. Typical everyday expenses which can be paid through this plan are insurance deductibles, co-insurance payments, eyeglasses, contact lenses, contact lens solution, dental care, orthodontic care, prescription drugs and some over the counter items (new OTC limitations beginning January 1, 2011).Participants in a Health Savings Account (HSA) are limited to dental, vision and preventative care expenses and well as post-deductible expenses.
  1. Health Savings Account (HSA) – If you participate in the Employer’s group High Deductible Health Plan (HDHP), you will be eligible to participate in an HSA. An HSA is an account held by “First HSA;” you may withdraw money from this account for out-of-pocket health care costs as the expenses are incurred. Withdrawals for health care purposes are tax free, withdrawals for expenses other than health related would be taxed as regular income plus a 10% penalty if you are under age 59½. The HSA may be funded from contributions made from the College and you. Your contributions may be made with after-tax dollars, which can be claimed as a deduction on your federal income tax return, or be contributed via payroll deduction as a pre-tax contribution under this Flexible Benefits Plan. Contact you plan administrator for additional information.
  1. Dependent Care Assistance Account – You can pay up to $5,000 of annual day care expenses with non-taxed dollars.
  1. Plan Year – The plan year begins January 1and ends December 31. All eligible expenses must be incurred during the plan year. All eligible employees must decide their level of participation prior to the beginning of each plan year. New eligible employees’ plan year will begin the first of the month coinciding with or next following the date they meet the eligibility requirement; their plan year will be a “short plan year’ beginning on that date and ending December 31st. Only eligible expenses incurred during the period of participation in the plan are eligible to be reimbursed.
  1. Eligibility for the Plan –all employees who are eligible to participate in the Employer’s group health insurance plan.

Health Flexible Spending Account (Health FSA)

Previously known as a Health Care Expense Account

Deposits

You can choose to set aside a specified amount each year in your Health FSA to help you pay for eligible health care expenses that are not covered or are only partially covered by any insurance you or your eligible dependents may have.

The amount you choose to set aside is automatically deducted throughout the year from your pay before federal tax, Social Security (FICA) tax and state taxes are calculated.

The total amount you elect to set aside for the Plan Year is available immediately. This means the full annual amount you elected is immediately available to you for reimbursement of eligible expenses beginning January 1 of the Plan Year.

The maximum amount that you may contribute from your own salary is $2,500 per plan year.

New: Effective for the Plan Year ending December 31, 2015, up to $500 of your remaining account balance will automatically be rolled to the new Plan Year beginning January 1, 2016. The benefit of this new provision is that up to $500 of your annual Health Flexible Spending Account election will not be subject to forfeiture.

The $500 Rollover provision replaces the Grace Period for the Health Flexible Spending Account.

Important:Participants in a Health Savings Account (HSA) are limited to dental, vision and preventative care expenses and well as post-deductible expenses.

Who is Covered

Expenses must be for yourself or an eligible dependent. Eligible dependents for the Health Flexible Spending Account include your spouse, children (including non-dependent children through age 26) and any other person who is a qualified dependent for IRS purposes (anyone you claim on your income tax form as an eligible dependent). You cannot be reimbursed for expenses other than those for eligible persons.

What is Covered

The following list includes, but is not limited to, the type of expenses covered under the Health Flexible Spending Account. Insurance Premiums are NOT eligible. Participants in a Health Savings Account (HSA) are limited to dental, vision and preventative care expenses and well as post-deductible expenses.

Air conditioning used for alleviating illness

/ FEES CONTINUED:
Ambulance hire / Physiotherapist
Artificial limbs and teeth / Podiatrist
Automobile modifications (hand controls,
Special equipment, mechanical lifts / Practical Nurse
Psychiatrist
Birth control pills / Psychologist
Braille books and magazines / Psychoanalyst
Childbirth preparation classes / Sex therapist
Contact lenses and solution / Specialist
Deductibles and co-pays under your
Health & Dental Plans / Surgeon
Therapy, weight loss program where prescribed as
Drugs (legal – prescriptions and over the counter (OTC)with limitations)
and medical supplies / treatment for a specific disease
Food and beverages (special) for specific ailments
Elastic hose, medically prescribed / when medically necessary and only to the extent that
Eyeglasses and contact lenses and supplies / costs exceed normal diet
FEES: / Halfway house residency
Abortion
/ Health spa in home (reduced by any increase in the value
Acupuncture
/ of the property)
Alcohol & Drug addiction treatment / Hearing devices
Anesthetist / Home modifications and special equipment
Blood donor / Hospital bills
Chiropractor / Iron lung, operating cost
Christian Science practitioners / Laetrile, when prescribed by doctor
Clinic / Lifetime care at medical facility
Cosmetic Procedures ONLY to correct congenital abnormality or disfiguring accident or illness / Lodging cost (for medical care) @ $50 per person
per night
Dentist / Nursing care expenses (includes nursing home care, for
Diabetes care expenses / medical reasons)
(insulin, syringes, monitoring equipment) / Obstetrical expenses
Diagnosis / Operations and related treatments
Diathermy / Oxygen equipment
Examination, physical / Radial Keratotomy
Eye examination / Rental of medical or healing equipment
Gynecologist / Retirement home fees, portion allocable to medical
Healing services / Care
Health Club Fees, if prescribed for specific medical condition / Sanitarium or rest home
Seeing-eye dog and hearing-assisting cat (including
Hospital / maintenance)
Laboratory / Special Education
Lip reading lessons for the deaf / Special Equipment for the physically disabled
Medical information plan / Special television set to receive closed captions
Midwife / Support or corrective devices (including special
Nurse / mattress and board for arthritis)
Ophthalmologist / Swimming pool fees for use of pool for exercises
Optician / prescribed by a physician to alleviate specific
Optometrist / medical conditions
Oral Surgery / Telephone for deaf
Orthodontists (if medically necessary) / Therapy treatments
Osteopath / Transportation expenses relative to illness
Pediatrician / Vasectomy
Physical and occupational therapy / Wood clapboard in home to treat allergy
Physician / X-rays

Eligible Over-The-Counter (OTC) Medicines and Drugs

OTC Medicines and Drugs must be purchased for medical purposes only for you, your spouse and/or dependents. Claims must be accompanied by a receipt or invoice with the name of the OTC item, medicine or drug as well as the date of purchase and doctor’s prescription (some exceptions are noted below). The Doctor’s prescriptions for OTC are only needed when submitting a claim.

As with other eligible expenses, purchase and use of the items must be incurred within the current Plan Year.

Eligible Items(items in bold are eligible expenses without a prescription):

Acne Medications

Allergy medications

Antibiotics

Anti-diarrhea medications

Anti-fungal medications

Anti-itch & insect bite remedies

Antihistamines

Aspirin and other pain medications

Asthma medications

Bandages, gauze pads, rubbing alcohol, liquid adhesives

Carpel tunnel wrist supports

Cold/hot packs for injuries

Corn/callus removers

Cough drops

Decongestants

Diabetic testing supplies & equipment

Durable medical equipment; e.g., walkers, wheelchairs, crutches

Eye products (including non-prescription reading glasses and contact lens solutions)

First aid creams (diaper, fever blister, cold sores, poison ivy, sunburn)

Heartburn medicines

Hemorrhoid treatments

Insulin

Laxatives

Menstrual cycle products for pain and cramp relief

Motion sickness treatments

Muscle or joint pain treatments or medicines

Nasal sprays

Nasal strips

Nicotine gum or patches for smoking cessation purposes

Sinus medications

Thermometers/accu strips

Throat lozenges

Topical creams for pain relief

Wart removers

Some items, such as vitamins, botanicals/herbs, feminine hygiene products, hormones, minerals and sunscreens would require a medical doctor’s “letter of medical necessity” to be eligible for reimbursement.

Some items, such as cosmetics, toiletries and items used primarily for your general health and well-being are not a permitted expense.

Items listed are intended to be examples: this list will be updated as more information becomes available.

As you can see, many different types of expenses are covered under the Health Flexible Spending Account. This is not an all-inclusive list. Eligible health care expenses are, in most cases, those which would qualify as deductions on your Federal Income Tax. The Internal Revenue Service’s Publication 502 gives a good overall presentation of which types of expenses are deductible although, in certain instances, other IRS regulations govern the eligibility of expenses for reimbursement. If you are not sure whether a particular expense is covered, you can contact the plan administrator.

What is Not Covered

The following are examples of expenses that cannot be reimbursed from your Health Flexible Spending Account:

  • Cosmetic Surgery, unless it is medically necessary
  • Expenses reimbursed by other sources, such as insurance companies, or a spouse’s or dependent’s employer’s Cafeteria plan
  • Expenses which you have deducted on your income tax return
  • Expenses not eligible to be claimed as an income tax deduction
  • Fees for exercise/athletic/health clubs where there is no specific medical reason for membership
  • Hair transplants
  • Illegal treatments, operations or drugs
  • Insurance premiums
  • Weight reduction programs for general well-being
  • Participants in a Health Savings Account (HSA) are limited to dental, vision and preventative care expenses as well as post-deductible expenses
  • Some over-the-counter medicines and drugs, see list of Eligible OTC Medicines and Drugs

Special Rules

If you are reimbursed for health care expenses with money from your Health Flexible Spending Account, you cannot claim those same expenses on your income tax return under the Health Care Expense Deduction (for expenses in excess of 7.5% of adjusted gross income). For most individuals, however, the tax savings from using a Health Flexible Spending Account will significantly exceed the tax deduction allowed if you had claimed these expenses.

For orthodontia expenses, keep in mind that expenses are considered as they are incurred, not as they are paid. This means that, if you choose to prepay your orthodontia expenses, only those services which have actually been rendered during the plan year may be considered under the plan for the current plan year.

Dependent Care Assistance Account

Deposits

You can choose to set aside a specified amount each year in your Dependent Care Assistance Account. This Account lets you use pre-tax dollars to pay for eligible dependent care expenses incurred so you can work, or, if you are married, so both you and your spouse can work or attend school full-time.

As with the Health Flexible Spending Account, the amount you choose to set aside under the Dependent Care Assistance Account is automatically deducted throughout the year from your pay before federal tax, Social Security (FICA) tax and state taxes are calculated.

However, unlike the Health Flexible Spending Account, funds in the Dependent Care Assistance Account are available only as they are deposited each payroll period during the Plan year. In other words, you cannot receive advance reimbursement from your Dependent Care Assistance Account.

Remember, the Health Flexible Spending Account and Dependent Care Assistance Accounts are two separate accounts and money from one account cannot be transferred to the other account.

Who is Covered

Eligible dependents under your Dependent Care Assistance Account include your children under age 13 who live with you, your spouse if mentally or physically disabled, and any other person who is a qualified IRS dependent, regardless of age, who is mentally or physically incapable of caring for himself or herself and lives with you.

What is Covered

You can use your Dependent Care Assistance Account to pay for eligible expenses such as:

  • Babysitter inside or outside your home
  • Child care or adult care centers that comply with state and local regulations
  • Housekeeper whose duties include dependent care
  • Person who cares for your dependents inside or outside of your home, as long as you do not claim that relative as a dependent on your income tax form

Eligible dependent care expenses are, in most cases, those which would qualify for the tax credit on your Federal Income Tax (IRS Form 2441, Child and Dependent Care Expenses). The Internal Revenue Service’s Publication 503 gives a good overall presentation of which types of expenses are deductible although, in certain instances, other IRS regulations govern the eligibility of expenses for reimbursement. If you are not sure whether a particular expense is covered, you should contact your Plan Administrator.

What is Not Covered

The following are examples of expenses that cannot be reimbursed from your Dependent Care Assistance Account:

  • Expenses for food, clothing, or education of a dependent
  • Expenses for transportation between your home and the place where dependent care services are provided, or to pick up a dependent care provider
  • Expenses claimed on your federal tax return under the Federal Dependent Care Tax Credit (IRS Form 2441)
  • Expenses claimed under your Health Flexible Spending Account

Special Rules

If you are reimbursed for dependent care expenses with money from your Dependent Care Assistance Account, you cannot claim those same expenses on your income tax return under the Federal Dependent Care Tax Credit. Generally, if your and your spouses’ combined adjusted gross income is more than $24,000 annually, you will probably save more in taxes by using the Dependent Care Assistance Account (to be certain you use the method that gives you the most tax savings, you may want to consult a tax advisor).

Both spouses’ total contributions to any Dependent Care Assistance Account or Accounts used to pay for Dependent care expenses cannot be more than $5,000 per year.

If you and your spouse each have reimbursement accounts through your respective employers, the total amount contributed to both plans combined cannot exceed $5,000 per year.

General Information

How to Prepare Health Flexible Spending Account Claims

To be reimbursed for eligible expenses not covered at all by any medical, dental, or vision insurance plans you or your eligible dependents may have, submit a completed claim form with an itemized bill or receipt as proof of services rendered; a credit card receipt or cancelled check is NOT adequate proof. Your bill or receipt must include: