FLEXIBLE SPENDING ACCOUNT HANDBOOK

FLEXIBLE SPENDING ACCOUNT HANDBOOK

BENEFIT OVERVIEW FOR EMPLOYEES AND THEIR DEPENDENTS

How do Flexible Spending Accounts Work?

An FSA is a Flexible Spending Account that allows you to set aside money on a pre-tax basis to pay for eligible healthcare and/or dependent day care expenses. This means that you could save about $.30 on every dollar you contribute! The amount that you choose to contribute is taken out of your paycheck in equal amounts each pay period, making it easy to save for out-of-pocket expenses that you have during the plan year.

You decide how much you want to contribute into your FSA Medical and/or Dependent Care accounts for the upcoming plan year. See attached Healthcare Flexible Account Worksheet for guidance. You should estimate your expenses carefully. Each pay period, the amount you elected is deducted from your pay check before taxes are withheld and then deposited into your Flexible Spending Account. After you incur eligible expenses and submit your claim forms, the funds in your flexible spending account are reimbursed to you tax- free.

When you receive your W-2 at year end, it will show your annual earnings less the contributions you made to your flexible spending account. You are not liable for federal, Social Security and in most cases state and local taxes on the amount you deposit because the deposits you made are not part of your taxable income.

In exchange for the tax break you get for participating, federal law requires forfeiture of any unused funds left at the end of the year. To avoid forfeitures, plan carefully, do not contribute more that you know you will need.

FSA Medical Spending Account

This FSA Medical Spending Account allows you to pay for eligible medical, dental, prescription, vision and/or hearing expenses that are not covered by insurance. Expenses must be incurred during your eligible dates of coverage in order to be reimbursable. Eligible expenses include, but are not limited to:

• Copays, coinsurance and deductibles

• Dental treatment (excluding cosmetic treatment) • Eyeglasses & contact lenses

• Hearing aids • Laser eye surgery

• Over-the-counter (OTC) items* • Orthodontia

• Physical therapy and chiropractic care • Prescriptions

*As of January 1, 2011, OTC medicines and drugs require a written prescription from your doctor in order to get reimbursed through an FSA. You will need a doctor’s prescription that includes the medication information and that this is medically necessary. However, there are many OTC items that do not require a prescription to get reimbursed such as:

• Band-aids, elastic bandages & wraps • Braces & supports

• Contact lens solution & supplies • Denture adhesive

• Diagnostic tests & monitors • First aid supplies

List of sample expenses are available on our website: www.125company.com.

Dependent Care Account

The dependent care account can be used to pay dependent care expenses for your child who is under the age of 13 or for a spouse or dependent that is unable to care for himself or herself while you work. To be eligible to contribute to this account, you must have a dependent that needs care while you and your spouse are at work. Expenses for children under age 13 who qualify as dependents on your income tax return are reimbursable.

Eligible expenses include:

 Before and after school programs  Day care (child & adult)

 Nursery school or preschool  Summer day camp

Weekend or "evening out" baby sitting expenses and overnight expenses are ineligible. The maximum exclusion under a Dependent care account for married individuals filing a joint return (or for an unmarried parent) is $5000. Married individuals filing separately are subject to a lower exclusion ($2,500). Other IRS rules or SPD may apply. Please contact 125Company or your tax professional for more information.

Please Note: Dependent Care Tax Credit verses the Dependent Care Flexible Spending Account, you will have to

examine your own tax situation to determine which one is more tax advantageous for you. As with any tax or accounting concern, you should consult with your tax advisor for additional information. Our web site,

www.125Company.com has tax chart guidelines which could help you with your decision.

The 125Company Benefit's Card

Companies that offer their employees the 125Company VISA Benefit Card will allow you to swipe & pay for your FSA Medical and Dependent Care expenses. Remember to save all your receipts. You may need to provide documentation to substantiate certain transactions. Our VISA card has a special three year renewal to reduce costs and to promote continuity between plan years.

How do I access my account?

This one-stop portal gives you 24/7 access to view information and manage your Flexible Spending Accounts. It enables you to:

• File a claim online • Upload receipts

• View up-to-the-minute account balances

• View your account activity, claims history and payment (reimbursement) history • Report a lost/stolen Card and request a new one

• Update your personal profile information • Change your login ID and/or password

The portal is designed to be easy to use and convenient. You have your choice of three ways to navigate this site: 1) work from sections within the Home Page, 2) hover over the six tabs at top of Home Page to see drop-down menus, or 3) follow links at the bottom of each page.

HOW DO I LOG ON TO HOME PAGE?

1. Go to www.125company.com

2. Enter your login ID and password (Your initial user name is your first initial and last name and your temporary password is the last 4 digits of your social security number. Example: Username: JSmith Password: 1111). 3. Click Login.

The Home Page is easy to navigate:

 The top section shows messages from your employer and links to employee information.

 The Action Required section displays alerts and relevant links that enable you to keep current on your accounts.  The Accounts section has links to account balances and activity details. On the far right, View Account Summary

links to the Account Summary page, where you can see and manage your accounts.

 The Next Scheduled Reimbursement section details when and how much you are projected to receive from any/all plans in which you are enrolled. (optional)

You can also hover over the tabs at the top or use links at the bottom of the page.

HOW DO I FILE A CLAIM AND UPLOAD A RECEIPT?

For those participants using the 125Company VISA Benefit Card: Please retain all medical receipts. While m o s t qualified prescriptions and co-pays will be automatically adjudicated, there will be medical items for which medical documentation is required. If your company is participating in an HRA, you should save all of your Explanation of Benefits (EOB) statements from your insurance company. You can submit this documentation along with your claim submission. Please upload documents online or fax to 1-877-303-0742.

Claims received by Friday before midnight eastern will be adjudicated and if approved will be reimbursed the following week. You can find claim forms on our website at www.125Company.comwhen you log into your account or under 125Quick Forms. Complete all sections of the claim form and fax it along with the corresponding receipts to 1-877-303-0742.

1. On the Home Page, under the Accounts tab, click File Claim on the drop-down menu. The File Claim screen will appear. Click File Claim next to the applicable account.

2. OR on the Home Page, in the Accounts section, click File Claim link for the applicable account in the Actions column.

3. Enter your claim information, and upload the receipt on the form that appears and click Add Claim. The claim is then added to the Claims Basket.

4. For submitting more than one claim, click File New Claim, select the plan and complete the form and click Add

Claim.

5. When all claims are entered in the Claims Basket, click Submit to send the claims for processing.

6. The Claim Confirmation page displays. Print the Claim Confirmation Form as a record of your submission. If you did not upload a receipt, print another Claim Confirmation Form to submit to the administrator, attaching the required receipts. OR if a receipt is required, you will see the Upload Receipt link. Click on it and the Receipts

Needed screen displays.

7. For each claim that requires a receipt, click Upload Receipt on the far right and follow instructions. (Your receipt must be in .doc, pdf, bmp, or gif format.)

8. The Receipt Uploaded confirmation appears: “Your receipt has been uploaded. You may upload additional receipts if needed until the claim is approved.”

9. After uploading, you may also click View Confirmation and print the form for your records.

NOTE: If you see a Receipts Needed link in the Action Required section of your Home Page, click on it. A listing of any

Claims Requiring Receipts will appear.

HOW DO I VIEW CURRENT ACCOUNT BALANCES AND ACTIVITY?

1. For current Account Balance only, on the Home Page, in the Accounts section, see the Available Balance column next to the applicable account.

2. For an Account Summary of your account(s) that includes your current Account Balance(s), on the Home Page, on the top right hand in the Accounts section, click on the View Account Summary link.

3.

HOW DO I VIEW MY CLAIMS HISTORY?

1. On the Home Page, in the Accounts section, click View Claim History next to the applicable account. 2. OR on the Home Page, under the Accounts tab, click File Claim on the drop-down menu. Then click

View History on the far right on the File Claim screen.

3. OR on the Home Page, in the Accounts section, click View Account Summary on the far right. Then click on the dollar amount in the Submitted Claims column next to the applicable amount.

HOW DO I VIEW MY PAYMENT (REIMBURSEMENT) HISTORY?

1. On the Home Page, under the Accounts tab, click Payment History on the drop-down menu. 2. You will see reimbursement payments made to date, including debit card transactions.

3. Click View Detail on the far right to see claim details.

HOW DO I REPORT A DEBIT CARD MISSING AND/OR REQUEST A NEW CARD?

1. On the Home Page, under the Profile tab, click Debit Cards on the drop-down menu.

2. Under the Actions column on the Debit Cards form, click Report Lost/Stolen or Order Replacement and follow instructions.

HOW DO I UPDATE MY PERSONAL PROFILE?

1. On the Home Page, under the Profile tab, click your choice on the drop-down menu: Profile Summary or Bank

Accounts.

2. Click any link on the Profile screen: Update Profile or Add/Update Dependent or Update Bank Account. Some profile changes will require you to answer an additional security question.

3. Complete your changes in the form. 4. Click Submit.

HOW DO I GET MY REIMBURSEMENT MONEY FASTER?

The fastest way to get your money is to sign up online for direct deposit to your personal checking account. Before you begin, make sure that your employer is offering direct deposit setup online.

1. On the Home Page, under the Accounts tab, click Change Payment Method on the drop-down menu.

2. Select Direct Deposit and click Change Payment Method. The Add Bank Account: Direct Deposit Setup page displays.

3. Enter your bank account information, and click Submit. 4. The Payment Method Changed confirmation displays.

HOW DO I CHANGE MY LOGIN AND/OR PASSWORD?

1. On the Home Page, under the Profile tab, click Login Information on the drop-down menu.

2. Follow instructions on the screen. (For a new account, the first time you log in, you will be prompted to change the password that was assigned by your plan administrator. Follow the instructions.)

3. Click Save.

HOW DO I VIEW OR ACCESS… …FORMS?

1. On the Home Page, use the Forms tab. 2. Click any form of your choice.

…NOTIFICATIONS?

1. On the Home Page, under the Notifications tab, click Notification History on the drop-down menu.

2. Click any link of your choice. Receipt Reminders, Account Statements, Advice of Deposits, Denial Letters, or

…PLAN INFORMATION?

1. On the Home Page, under the Accounts tab, click Account Summary on the drop-down menu. 2. Click the applicable account in the first column on the left and the Plan Rules open in another browser

OR on the Home Page, under the Accounts tab, click Plan Descriptions on the drop-down menu for basic information.

Then click each applicable plan to see the Plan Detail screen.

0ur 125Going Green initiative includes: automated email notifications, 125Company Visa Card with a 3

year renewal, direct deposit ,internet claim recording & retrieval process and more.

"Try our Desktop Upload Link in your online account portal for

receipts.

Coming Soon! IPhone and Droid secured claim submission to be

released in Spring 2013."

Contact Us:

Customer 125Support: 877-303-3539 or 301- 977-8840

Fax Claims to: 877-303-0742

HEALTH CARE FLEXIBLE ACCOUNT WORSHEET

ELIGIBLE EXPENSES DU RING YOUR PLAN YEAR : ONLY EXPENSES

NOT CO VERED BY OTHER INSURANCE OR ANY OTH ER SOURCE ARE ELIGIB LE FOR REIMBURSEMENT W ITH AN FSA.

DOLLAR AMOUNT MEDICAL PLAN DEDUCTI BLE:

MEDICAL CO -PAYMENT: DENTAL PLAN DEDUCTIB LE: DENTAL CO-PAYMENT:

MEDICAL, DENTAL, AND /OR VISION EXAMS:

PRESCRIPTION DRUGS AND ANY REQUIRED DOCTOR’S RX # FOR OTC CHANGES FOR JANUARY 1ST, 2011 :

ANY ANTICIPATED MEDI CAL BALANCE BILLING OVER AND ABOVE HEAL T H CARRIER ALLOW ANCE:

EYEGLASSES/CONTACT L ENSES: ORTHODONTIA:

AMOUNTS PAID OVER PL AN LIMITS: (NONPARTICIPATING OR NON -NETW ORK PROVIDERS, VISIT OR DOLLAR MAXIMUMS ON SERVICES ) OTHER ELIGIBLE HEAL TH CARE EXPENSES:

DEPENDENT CARE EXPEN SES (PLEASE REVIEW QUALI FICATION RULES)

What is the Definition of an Eligible Claim as described in IRC Sec 213d?

IRC 213(d) Definition and for purposes of this section - (1) The term "medical care" means amounts paid for the diagnosis,

cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body. Excerpt from Title 26, Subtitle A, Chapter 1, subchapter B, Part VII Section 213.

While the IRC Code is extensive and we cannot cover every circumstance, “the term "medical care" does not include cosmetic surgery or other similar procedures, unless the surgery or procedure is necessary to ameliorate a deformity arising from, or directly related to, a congenital abnormality, a personal injury resulting from an accident or trauma, or disfiguring disease. (B) Cosmetic surgery defined. - For purposes of this paragraph, the term "cosmetic surgery" means any procedure which is directed at improving the patient's appearance and does not meaningfully promote the proper function of the body or prevent or treat illness or disease.” IRC 213d - Sec 9. This list is non-inclusive and does not represent all allowable or

non-allowable charges. You may refer any further questions regarding allowable and non-allowable charges to your service provider and SPD.

Eligible Expenses

 Adoption - Medical Expense (incurred before adoption is finalized)

 Alcoholism Treatment  Ambulance

 Artificial Limbs  Artificial Teeth

 Braille Books/Magazine (difference between regular material and Braille materials)  Car Controls for Handicapped  Chiropractic Services

 Christian Science Practitioners (payments for medical care)

 Coinsurance Amounts and Deductibles  Contact Lenses and Solution

 Crutches

 Dental Treatment  Diagnostic Tests

 Drug Addiction Treatment  Eye Examinations and Eyeglasses

 Guide dog or Other Animal (purchase, training, and care of animal)

 Hearing Aids and Examinations  Hospital Services

 Injections  Insulin

 Laboratory Fees  Lasik Eye Surgery  Learning Disabled Child:  Special School/Teacher

 Medical Monitoring and Testing Devices (if prescribed by physician for a particular  ailment).

 Medicines (If prescribed by physician to treat a specific ailment and if only available by prescription.)

 Occlusal Guards (to prevent teeth grinding)  Operations (Legal operations which treat a  specific ailment)

 Optometrist

 Orthodontia (unless for cosmetic purposes)  Osteopath

 Oxygen

 Periodontal Fees

 Physical Exams (except for employment related physicals)

 Physical Therapy (for specified medical purpose)  Prescription Sunglasses

 Private Hospital Room  Psychiatric Care  Psychoanalysis  Psychologist  Radial Keratotomy  Surgery

 Telephone for the Deaf  Transplants

 Transportation for Seminar on Medical Condition  Cost of Seminar on Medical Condition

Notice:

New Regulations Regarding OTC Medications Effective 1/1/2011

The Internal Revenue Service recently issued Notice 2010-59, which describes the new eligibility limitations of over-the-counter drugs and medicines for tax-free reimbursement under an employer-sponsored health plan. The new ruling states that beginning January 1, 2011, specific OTC medicines and drugs must be prescribed in order to qualify for reimbursement from an employer sponsored health plan (such as an FSA or HRA) and HSAs. The implementation of both eligible and ineligible items will be handled by merchants, through IIAS and will be coordinated by SIGIS (Special Interest Group for IIAS Standards). This will impact the way that many OTC items are purchased. Consumers may begin to schedule additional office visits to obtain prescriptions for newly excluded OTC products or request more expensive prescription alternatives. There may be a rise in manual claims as consumers submit receipts, with prescriptions, for OTC items that are not allowed for debit card by their merchant’s point of sale system.

Which OTC categories will require prescriptions?

The new regulations require prescriptions for the following over-the-counter (OTC) categories: • Acid Controllers • Digestive Aids

• Allergy & Sinus • Feminine Anti-Fungal/Anti-Itch • Antibiotic Products • Hemorrhoid Preps

• Anti-Diarrheal • Laxatives• Anti-Gas • Motion Sickness • Anti-Itch & Insect Bite • Pain Relief

• Anti-Parasitic Treatments • Respiratory Treatments • Baby Rash Ointments/Creams• Sleep Aids & Sedatives • Cold Sore Remedies • Stomach Remedies• Cough, Cold & Flu

Which OTC purchases will still allow debit card use?

Over 27,000 OTC items will remain eligible without a prescription. Such as:

• Band Aids • Elastic Bandages & Wraps • Braces and Supports • First Aid Supplies • Catheters • Ostomy Products

• Contact Lens Supplies & Solutions • Insulin & Diabetic Supplies

• Denture Adhesives • Reading Glasses • Diagnostic Tests & Monitors

• Wheelchairs, Walkers, Canes

The full updated list of items will be provided by SIGIS by 12/15/2010.

The ruling also allows for continued use of debit cards for any purchases at 90% merchants as they do not have an IIAS system and therefore do not substantiate medical items at the point of sale.

Substantiation will continue to be required for all purchases at 90% merchants. The list of eligible 90% merchants is available on the SIGIS website.

The IRS ruling states that debit card systems are not able to differentiate between prescribed and non-prescribed items, and therefore the impacted OTCs cannot be purchased with a debit card. However, there are Inventory Information Approval Systems (IIAS) that can delineate between OTC and “RX” OTC items, substantiating only the prescribed purchases.

While this should meet the IRS requirements, an additional ruling would be helpful. SIGIS is working with the IRS to obtain

an update.

Beginning January, 1, 2011, health FSA, HRA and HSA debit cards may be continued to be used or purchase OTC medicine or drugs if:

 Prior to the purchase, the prescription for the OTC is presented (in any format, i.e. electronic or paper ) to the pharmacy;

 The OTC medicine is dispensed by the pharmacist with applicable law;  The RX number is assigned;

 The pharmacy must retain a record of the RX number, the name of the purchaser (or the name of the person for whom the prescription applies) and the date and the amount of the purchase;

 All of the records are available to the employer or its agent upon request;

 The debit card system will not accept a charge for an OTC medicine unless an RX number has been assigned; and  All of the requirements of this guidance are met.