The
Flexible Benefit Information 2007
1. Q. WHAT IS THE UNIVERSITY'S FLEXIBLE
BENEFITS PLAN?
A. The
University's Flexible Benefits Plan permits you to pay for health and dental
insurance premiums and certain predictable medical and dependent care expenses
with before-tax dollars.
2. Q. WHAT ARE MY CHOICES AT THE
A. If
you participate in one of the State Medical Insurance Programs and/or the
Dental Program you are automatically
enrolled in the premium conversion feature of the Flexible Benefits
Plan. The premiums for these programs
are paid with before-tax dollars. Additionally, you may enroll in a Medical
Reimbursement Account and/or a Dependent Care Reimbursement Account.
3. Q. WHAT IS A REIMBURSEMENT ACCOUNT?
A. Reimbursement
accounts are accounts established by you to exclude your out-of-pocket medical
and/or dependent care expenses from both Social Security and Federal Income
taxes. You make deposits to the accounts through a tax-free salary reduction
agreement and you will be reimbursed for incurred medical and/or dependent care
expenses upon submission of a claim for reimbursement. Your reimbursement will
be paid to you on your next payroll check.
4. Q. WHAT IS THE MAJOR BENEFIT OF USING
THE FLEXIBLE BENEFITS PLAN?
A. Social
Security and Federal income tax savings. If you have high out-of-pocket
expenses for medical or dependent care and establish the reimbursement accounts
wisely, your savings can be substantial.
5. Q. IF I ESTABLISH BOTH MEDICAL AND
DEPENDENT CARE REIMBURSEMENT ACCOUNTS, CAN I COMBINE OR TRANSFER AMOUNTS
BETWEEN THE TWO ACCOUNTS?
A. No.
Each reimbursement account must be used separately. Funds cannot be combined or
transferred from one to the other.
6. Q. WILL MY RETIREMENT BENEFITS BE
AFFECTED BY MY PARTICIPATION IN THE FLEXIBLE BENEFITS PLAN?
A. No.
There will be no impact on your retirement benefits. Retirement contributions
and calculations of retirement benefits will be made on the basis of your gross
salary.
7. Q. WILL MY SOCIAL SECURITY BENEFIT BE
AFFECTED BY MY PARTICIPATION IN THE FLEXIBLE BENEFITS PLAN?
A. Yes.
Your benefit is based on your social security gross wages and the Flexible
Benefits Plan reduces those wages by the
amount of your eligible insurance premiums and/or reimbursement account
reductions.
8. Q. WILL THE FLEXIBLE BENEFITS PLAN
AFFECT THE MAXIMUM AMOUNT I CAN DEFER UNDER THE UNIVERSITY'S DEFERRED
COMPENSATION PROGRAM?
A. Participation
in the flexible benefits program will not have an impact on your deferred
income limitations for the 403(b) and 401(k) plans, however, there may be an
affect on the 457 plan limitations.
9. Q. IF I AM NEARING RETIREMENT, WOULD IT
BE BENEFICIAL FOR ME TO ELECT TO PAY TAXES ON MY HEALTH AND DENTAL PREMIUMS
THAT ARE EXCLUDED FROM TAXES IN THE UNIVERSITY'S FLEXIBLE BENEFITS PLAN?
A. Social
security benefits are based on your social security earnings averaged over most
of your working lifetime. If you elect to participate in the Flexible Benefits
Plan, your social security earnings will be less and you may receive a smaller
social security benefit when you retire. This only applies, however, if your
reduced salary is less than the social security wage base. The reduction due to
the medical and dental insurance premiums would be negligible, but the
reduction due to reimbursement accounts could be substantial if you
participated in the plan for a number of years and elected the maximum
reduction allowed by law.
10. Q. IF I CHOOSE TO ENROLL IN A
REIMBURSEMENT ACCOUNT, HOW WILL THE SALARY REDUCTION BE HANDLED?
A. If
you are paid on the monthly payroll, one-twelfth of the annual amount will be
deducted from your paycheck each month. If you are paid biweekly, the annual
amount will be divided by 24 and that amount will be deducted from the first
two pay periods ending in each month. There will be no deduction on the third
paycheck when there are three pay periods ending in a month.
11. Q. CAN I CHANGE THE AMOUNT OF MY SALARY
REDUCTION AGREEMENT OR STOP MY PARTICIPATION DURING THE COURSE OF THE CALENDAR
YEAR?
A. Yes,
but only if you have a change in family status such as marriage, divorce, death
of a spouse or dependent, birth or adoption of a child, or loss of eligibility
status. The change must be consistent with your change in family status. For
example, you cannot change to a lesser plan of coverage because you gained a
dependent. When applicable, a change in
your participation will become effective the first of the month following
receipt of your request, provided you complete a Change in Family Status form
and attach proof of the change. The Change in Family Status form must be
completed within 30 days of the change. If you are a male employee whose wife
is on maternity leave, you have 30 days after your wife returns to work to
change your deduction amounts.
12. Q. WHAT DO I NEED TO DO TO ENROLL IN A
REIMBURSEMENT ACCOUNT?
A. To
enroll you must complete a
13. Q. CAN I ENROLL IN A REIMBURSEMENT
ACCOUNT AT ANY TIME?
A. No.
You must enroll during the open enrollment period between November 1 and
December 15 each year to become effective on January 1. New employees must enroll during the first 30
days of employment. Employees on leave of absence during open enrollment must
enroll within 30 days of the return from leave.
14. Q. DO I HAVE TO RE-ENROLL IN THE
REIMBURSEMENT ACCOUNTS EACH YEAR?
A. Yes.
Each year during the open enrollment period between November 1 and December 15,
you must complete a Flexible Benefits Plan Election and Compensation Reduction
Agreement form.
15. Q. IS THERE A LIMIT TO THE AMOUNT I CAN
CONTRIBUTE TO A MEDICAL REIMBURSEMENT ACCOUNT?
A. Yes,
the maximum is 20 percent of gross salary or $5,000, whichever is less.
16. Q. WHO IS ELIGIBLE TO INCUR EXPENSES ON
MY MEDICAL REIMBURSEMENT ACCOUNT?
A. You
may file medical expenses for yourself, your spouse (if filing a joint tax
return), and any other person you claim as a dependent on your federal income
tax return.
17. Q. WHAT TYPES OF MEDICAL EXPENSES ARE
ELIGIBLE FOR INCLUSION IN A MEDICAL REIMBURSEMENT ACCOUNT?
A. Examples
of eligible medical expenses:
Acupuncture Hearing
aids/batteries
Birth
control pills Hospital
services
Braille
books and magazines Immunizations
Co-insurance
amounts Laboratory
fees
Contact
lenses Lasik
Surgery
Reconstructive
surgery Lodging
for medical treatment (maximum $50 per night)
Deductibles
- Insurance Medical
out-of-pocket expenses
Dental
expenses (out of pocket) Nursing
home medical expenses
Doctor's
fees Orthodontic
care
Prescription
Drugs Over-the-counter (OTC) items that are medically
necessary
Expenses for
alcoholism and Oxygen
drug addiction treatment Physical
examination/check-ups
Medical
Equipment (for a medical Prescribed foods
Condition) Prescribed
vitamins
Eye
examinations) Smoking
Cessation Programs
Eye glasses Special
schools for handicapped
Guide dogs Therapy
received as medical treatment
Health
screening examinations Transportation
to receive medical care *
X-ray
fees
*Transportation
refers to documented services such as ambulance, plane, train, etc. Automobile
mileage for medical treatment is an ineligible expense.
18. Q. WHAT TYPES OF MEDICAL EXPENSES ARE
NOT ELIGIBLE FOR REIMBURSEMENT UNDER THE MEDICAL REIMBURSEMENT ACCOUNT?
A. Medical
premiums for other health coverage such as COBRA, Medicare A&B, major
medical, dental, vision and cancer are not reimbursable expenses. This
includes all such premiums for the employee's spouse or dependents.
Weight loss programs - only the medically related expenses such as laboratory fees and doctors consultations are reimbursable.
Non-prescription
smoking cessation aids such as nicotine gum and patches
Health club
dues or exercise programs
Items that
are merely beneficial to general health, such as vitamins
Premiums for
life, accidental, disability or automobile insurance
Cosmetics
(even if acquired from a dermatologist), cosmetic surgery (including
electrolysis) - only surgery necessary to repair disfigurement due to an accident
is reimbursable
Bleaching or
other forms of whitening of teeth
Sales tax
related to purchases of eligible expenses
DEPENDENT CARE REIMBURSEMENT ACCOUNT
19. Q. WHAT IS A DEPENDENT CARE
REIMBURSEMENT ACCOUNT?
A. A
dependent care account allows you to pay day care expenses for the care of your
qualified children or disabled dependents with before-tax dollars. This does
not include medical expenses for your dependents.
20. Q. WHO CAN ESTABLISH A DEPENDENT CARE
REIMBURSEMENT ACCOUNT?
A. You
may establish a Dependent Care Reimbursement Account if you are a single parent
or if you are married and both you and your spouse are employed. The spouse
employment rule is waived if your spouse is a full-time student for at least
five months during the year, or mentally or physically disabled and unable to
provide self care.
21. Q. WHO QUALIFIES AS AN ELIGIBLE
DEPENDENT?
A. Your
children under the age of 13 that you claim as a dependent on your federal
income tax return, spouses, and dependents of any age who are mentally or
physically disabled.
22. Q. WHAT TYPES OF EXPENSES QUALIFY FOR
DEPENDENT CARE REIMBURSEMENT?
A. Dependent
care expenses include charges for licensed nursery schools and day care centers
for children and licensed day care centers for disabled dependents, including
parents. You may also include charges from individuals who have the
responsibility of providing care for your eligible dependent, either inside or
outside your home. If care is provided outside your home, the provider must
generally meet all licensing requirements. Only expenses which are properly
documented can be considered for reimbursement.
23. Q. WHAT TYPES OF DEPENDENT CARE
EXPENSES DO NOT QUALIFY FOR REIMBURSEMENT?
A. Internal
Revenue regulations do not allow reimbursement for: (1) days you and your
spouse are not working--including sick leave, vacation days, or breaks in
semesters--or days when you do not meet the eligibility requirements; (2) care
provided by your children who are under the age of 19 or by anyone you claim as
a dependent on your federal income tax return; (3) transportation, education,
clothing, or entertainment; (4) baby-sitting for social events; or (5) the
additional costs for educational workshops or camps offered by day care centers
or schools.
24. Q. MAY I CLAIM THE COST OF SENDING A
DEPENDENT TO KINDERGARTEN?
A. No,
25. Q. WHAT AMOUNT CAN I CLAIM IF THE COST
OF PRE-SCHOOL COVERS BOTH EDUCATION AND CHILD CARE?
A. If
the cost of schooling can be separated, you must divide the total cost between
the cost of care and the cost of schooling. Only the cost of care will be considered
a qualified expense. For a more detailed explanation of eligible expenses,
please refer to IRS Publication 503, Child and Dependent Care Expenses.
26. Q. IS THE COST OF A HOUSEKEEPER AN
ELIGIBLE EXPENSE UNDER THE DEPENDENT CARE REIMBURSEMENT ACCOUNT?
A. The
person who cares for the dependent can also do housecleaning, but if you hire
an individual for housekeeping chores only, you cannot include the
housecleaning expenses in the reimbursement account.
27. Q. WHAT SHOULD I DO IF I DID NOT RECEIVE
A BILL?
A. The
provider of dependent care should sign the Claim for Reimbursement form and
enter their social security or taxpayer ID number in the space provided.
Canceled checks cannot be used as proof of expense.
28. Q. MY SPOUSE WAS LAID OFF FROM WORK.
CAN I CONTINUE MY PARTICIPATION IN THE DEPENDENT CARE REIMBURSEMENT ACCOUNT
WHILE MY SPOUSE LOOKS FOR A JOB?
A. Yes.
However, you can only be reimbursed for the expenses incurred during the period
your spouse was actually looking for a job.
29. Q. WHAT IS THE MAXIMUM AMOUNT I CAN
CONTRIBUTE TO A DEPENDENT CARE REIMBURSEMENT ACCOUNT?
A. Dependent
care expenses are limited to $2,500 for a married person filing a separate tax
return or $5,000 for a family or single parent household.
30. Q. IS ANY ADDITIONAL IRS REPORTING
REQUIRED WHEN TAKEN ADVANTAGE OF THE DEPENDENT CARE REIMBURSEMENT ACCOUNT?
A. Yes,
to report the exclusion you must complete Part III of either Form 2441 or
Schedule 2 (Form 1040A).
31. Q. WHAT HAPPENS TO THE UNUSED MONEY IN
MY REIMBURSEMENT ACCOUNTS IF I GO ON LEAVE OF ABSENCE, TERMINATE MY
EMPLOYMENT, DIE, OR USE FAMILY MEDICAL
LEAVE?
A. If
you go on leave of absence without pay, retire, or otherwise terminate your
employment, you may continue to be reimbursed for expenses incurred during the
plan year if you choose to continue the plan by making a lump sum contribution.
If you do not continue the plan, you will have 90 days to submit claims for
expenses incurred prior to the leave, retirement, or termination. In the event
of your death, your beneficiary or estate may be reimbursed for expenses
incurred prior to your death. Claims for those expenses may be filed through
April 30th of the following year. An employee returning from a Leave of Absence
will not automatically be re-enrolled in a reimbursement account program. The
employee must request enrollment and complete a new enrollment form within the
first 30 days after returning.
If you go on
Family Medical Leave and did not continue the plan, you have 30 days from the
date of your return to work to continue your Flexible Benefits Reimbursement
Accounts.
32. Q. WHAT HAPPENS IF I ENROLL IN A
REIMBURSEMENT ACCOUNT AND OVERESTIMATE MY EXPENSES?
A. If
you overestimate your expenses when establishing a reimbursement account, you
lose any amount that is in excess of your incurred expenses. Employees may use balances that remain at
the end of the 2005 Plan Year to pay for health care and dependent care
expenses incurred during the first 2 ˝ months of the following plan year. The
University, in accordance with Internal Revenue Service regulations, cannot
refund any amount not supported by actual expenses.
33. Q. HOW WILL I BE REIMBURSED FOR ACTUAL
EXPENSES?
A. Upon
submission of a reimbursement claim form, you will receive reimbursement for
your expenses through your payroll check.
We are required to obtain original claims. A copy, or a FAX copy cannot be
accepted.
34. Q. WHAT DO I ATTACH TO MY REIMBURSEMENT
CLAIM FORM AS PROOF OF SERVICE?
A. You
must attach an itemized invoice with the name, Federal ID Number and address of
the provider, name of the patient, date of service and cost of service. Cash
register receipts or other receipts that only indicate "Payment on
Account" or "Balance Forward" are not proof of service.
35. Q. CAN I USE CANCELED CHECKS OR
CREDIT/DEBIT CARD RECEIPTS AS PROOF OF SERVICE?
A. No.
It's not when you pay an expense, but when you incur it that makes it eligible
for reimbursement.
36. Q. DOES THE UNIVERSITY PAY THE PROVIDER?
A. The
University will reimburse you directly. It is your responsibility to pay the
provider.
37. Q. WHAT IS THE PROCEDURE TO MAKE A
CLAIM FOR REIMBURSEMENT ONCE I HAVE INCURRED APPLICABLE EXPENSES?
A. When
you receive an itemized bill, you must complete a Claim for Reimbursement form
and return both the claim form and the itemized bill to your campus
representative or the University-Wide Payroll Office, P115 Andy Holt Tower,
Knoxville, TN 37996-0100. Reimbursement for these expenses will be included in
your next payroll check.
• Even
if you had participation in the reimbursement accounts this or any other year, you
must re-enroll. Refer to question #14.
• Canceled
checks, credit/debit card receipts, and cash register receipts cannot be used
as proof of medical or dependent care service.
• Receipts
which only show balance forward, received on account, or payment on account
cannot be used. Date of service must be shown.
• The
service must have been rendered during the calendar year of the plan or within
the first 2 ˝ months of the following year. You cannot carry balances forward
(past the first 2 ˝ months) or pick up old year expenses.
• If
you are paid monthly, claims must be received in the Systems Payroll Office by
the 15th of each month. If you are paid biweekly, claims are due on Monday. the week before payday. EXCEPTIONS:
Monthly paid employees must have December claims in by December 10th.
•
FAXED copies of claims will not be accepted.
• One
Blue Cross/Blue Shield Explanation of Benefits (EOB) which states total
out-of-pocket expenses cannot be used alone. There must be proof for each
expense claimed. Only the amounts listing in the section “Member Responsibility” or “Amount You Owe
Provider” are eligible for reimbursement.
•
Employees participating in the Dependent Care
Reimbursement Account are required by the Internal Revenue Service to complete
Part III of Form 2441 or Schedule 2 when completing your income tax return to
claim the exclusion.
•
Care should be taken to submit each expense only once.
•
Expenses reimbursed through this Flexible Benefits
Program may not be used as tax credits or deductions on your annual federal
income tax return.
•
Expense reimbursement requests for prior year plans
must be filed by April 30 of the current year for reimbursement.