Flexible Benefits 2010
WHAT IS THE UNIVERSITY'S FLEXIBLE BENEFITS PLAN?
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.
WHAT ARE MY CHOICES AT THE UNIVERSITY OF TENNESSEE?
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.
WHAT IS A REIMBURSEMENT ACCOUNT?
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.
WHAT IS THE MAJOR BENEFIT OF USING THE FLEXIBLE BENEFITS PLAN?
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.
IF I ESTABLISH BOTH MEDICAL AND DEPENDENT CARE REIMBURSEMENT ACCOUNTS, CAN I COMBINE OR TRANSFER AMOUNTS BETWEEN THE TWO ACCOUNTS?
No. Each reimbursement account must be used separately. Funds cannot be combined or transferred from one to the other.
WILL MY RETIREMENT BENEFITS BE AFFECTED BY MY PARTICIPATION IN THE FLEXIBLE BENEFITS PLAN?
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.
WILL MY SOCIAL SECURITY BENEFIT BE AFFECTED BY MY PARTICIPATION IN THE FLEXIBLE BENEFITS PLAN?
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.
WILL THE FLEXIBLE BENEFITS PLAN AFFECT THE MAXIMUM AMOUNT I CAN DEFER UNDER THE UNIVERSITY'S DEFERRED COMPENSATION PROGRAM?
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.
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?
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.
IF I CHOOSE TO ENROLL IN A REIMBURSEMENT ACCOUNT, HOW WILL THE SALARY REDUCTION BE HANDLED?
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.
CAN I CHANGE THE AMOUNT OF MY SALARY REDUCTION AGREEMENT OR STOP MY PARTICIPATION DURING THE COURSE OF THE CALENDAR YEAR?
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.
WHAT DO I NEED TO DO TO ENROLL IN A REIMBURSEMENT ACCOUNT?
To enroll you must complete a University of Tennessee Reimbursement Accounts Election and Compensation Reduction Agreement form. If you enroll in the Dependent Care Reimbursement Account, you must also complete a Dependent Listing form.
CAN I ENROLL IN A REIMBURSEMENT ACCOUNT AT ANY TIME?
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.
DO I HAVE TO RE-ENROLL IN THE REIMBURSEMENT ACCOUNTS EACH YEAR?
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.
IS THERE A LIMIT TO THE AMOUNT I CAN CONTRIBUTE TO A MEDICAL REIMBURSEMENT ACCOUNT?
Yes, the maximum is 20 percent of gross salary or $5,000, whichever is less.
WHO IS ELIGIBLE TO INCUR EXPENSES ON MY MEDICAL REIMBURSEMENT ACCOUNT?
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.
WHAT TYPES OF MEDICAL EXPENSES ARE ELIGIBLE FOR INCLUSION IN A MEDICAL REIMBURSEMENT ACCOUNT?
WHAT TYPES OF MEDICAL EXPENSES ARE NOT ELIGIBLE FOR REIMBURSEMENT UNDER THE MEDICAL REIMBURSEMENT ACCOUNT?
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.
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
WHAT IS A DEPENDENT CARE REIMBURSEMENT ACCOUNT?
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.
WHO CAN ESTABLISH A DEPENDENT CARE REIMBURSEMENT ACCOUNT?
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.
WHO QUALIFIES AS AN ELIGIBLE DEPENDENT?
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.
WHAT TYPES OF EXPENSES QUALIFY FOR DEPENDENT CARE REIMBURSEMENT?
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.
WHAT TYPES OF DEPENDENT CARE EXPENSES DO NOT QUALIFY FOR REIMBURSEMENT?
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; (5) the additional costs for educational workshops or camps offered by day care centers or schools; or (6) overnight camps are generally not allowed, unless the expenses can be divided by the camp into daytime and nighttime portions.
MAY I CLAIM THE COST OF SENDING A DEPENDENT TO KINDERGARTEN?
No, Tennessee law mandates all children attend kindergarten therefore tuition payments for kindergarten are not considered qualified expenses.
WHAT AMOUNT CAN I CLAIM IF THE COST OF PRE-SCHOOL COVERS BOTH EDUCATION AND CHILD CARE?
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.
IS THE COST OF A HOUSEKEEPER AN ELIGIBLE EXPENSE UNDER THE DEPENDENT CARE REIMBURSEMENT ACCOUNT?
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.
WHAT SHOULD I DO IF I DID NOT RECEIVE A BILL?
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.
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?
Yes. However, you can only be reimbursed for the expenses incurred during the period your spouse was actually looking for a job.
WHAT IS THE MAXIMUM AMOUNT I CAN CONTRIBUTE TO A DEPENDENT CARE REIMBURSEMENT ACCOUNT?
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.
IS ANY ADDITIONAL IRS REPORTING REQUIRED WHEN TAKEN ADVANTAGE OF THE DEPENDENT CARE REIMBURSEMENT ACCOUNT?
Yes, to report the exclusion you must complete Part III of either Form 2441 or Schedule 2 (Form 1040A).
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?
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.
WHAT HAPPENS IF I ENROLL IN A REIMBURSEMENT ACCOUNT AND OVERESTIMATE MY EXPENSES?
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 20010 Plan Year to pay for health care and dependent care expenses incurred during the first 2 ½ months of the following plan year. The University, in accordance with Internal Revenue Service regulations, cannot refund any amount not supported by actual expenses.
HOW WILL I BE REIMBURSED FOR ACTUAL EXPENSES?
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 FAX copy cannot be accepted.
WHAT DO I ATTACH TO MY REIMBURSEMENT CLAIM FORM AS PROOF OF SERVICE?
You must attach an itemized invoice with the name and address of the provider, name of the patient or child attending day care, date of service and cost of service. Dependent Care Claims must also have the Federal ID Number of the provider. Cash register receipts or other receipts that only indicate "Payment on Account" or "Balance Forward" are not proof of service.
CAN I USE CANCELED CHECKS OR CREDIT/DEBIT CARD RECEIPTS AS PROOF OF SERVICE?
No. It's not when you pay an expense, but when you incur it that makes it eligible for reimbursement.
DOES THE UNIVERSITY PAY THE PROVIDER?
The University will reimburse you directly. It is your responsibility to pay the provider.
WHAT IS THE PROCEDURE TO MAKE A CLAIM FOR REIMBURSEMENT ONCE I HAVE INCURRED APPLICABLE EXPENSES?
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.
Canceled checks, credit/debit card receipts, and cash register
receipts cannot be used as proof of medical or dependent care
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 ½ months of the following year. You cannot carry balances forward (past the first 2 ½ 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.
P115 Andy Holt Tower
Knoxville, TN 37996