Spending Accounts (For Plan Year 2013) Health Care & Dependent Care SHPS

1. Spending Accounts (For Plan Year 2013)Health Care & Dependent CareSHPS

2. Plan Design/Premium Changes for AE 2013 • Spending Accounts – SHPS/ADP • No increase in admin fees with current plan design • HCSA annual maximum will reduce from $5,040 to $2,460 • Monthly maximum will be $205 • Compliance with Patient Protection and Affordable Care Act (PPACA) • Note: a monthly administration fee of $3.20 is included in the total contribution amount • Employees who contributed a larger amount in 2012 will be reduced to the new HCSA maximum for 2013

3. How Does it Work? • Employee chooses a monthly contribution amount • Pre-tax contribution is transferred into the Spending Account • Employee submits eligible expenses • Employee reimbursed with pre-tax dollars

4. General or Limited Purpose Health Care Spending Account • Employees may submit eligible expenses for your spouse (e.g. coinsurance payments; deductibles from another health plan) • It is illegal to submit expenses that have been paid by another insurance plan or reimbursed by another spending account • Children’s medical expenses covered under the employee, as well as the spouse’s, group medical coverage can be submitted • An Explanation of Benefits from both insurance carriers is required

5. Limited Purpose Health Care Spending Account • Employees must select if enrolling in a Health Savings Account • Only dental and vision costs that are not normally eligible under the General Purpose Health Care Spending Account are covered

6. Health Care Spending Account Debit Card • Employee must keep the EOBs and/or receipts • SHPS will request supporting documentation, normally every 2 months • EOBs and/or receipts along with the request letter from SHPS must be submitted for validation purposes • SHPS will submit validation letters online • If SHPS has the employee’s email address, requests will be emailed directly to the individual

7. Health Care Spending Account Debit Card • If documentation is not received after the validation request is issued, the card will be turned off (60 – 90 days) • An overpayment will be noted on the account • When a paper claim is received, a reimbursement will not occur. It will be deducted from the overpayment showing

8. Dependent Care Spending Account • Maximum contribution: $416/ month (maximum of $4,992/ year) • Coverage for new employees is effective the first of the month following one full calendar month of employment • Monthly administration fee: $3.20 • Reimbursement requests will be processed after services have been fully rendered • Reimbursement subject to account balance • Department must transfer contributions to SPA before account can be credited

9. Dependent Care Spending Account • Eligible dependents would include: • Children under age 13 • Spouse (if mentally or physically disabled) • Any other person who is a qualified IRS dependent, regardless of age, who is mentally or physically disabled

10. Health Savings Accounts

11. Health Savings Accounts • Tax-exempt account that can be used for qualified medical expenses not otherwise covered by the High Deductible Health Plan* • Qualified medical expenses include: • HDHP* Deductibles • Co-payments • Prescriptions and over-the-counter medication • Dental services • Vision Care • Must be enrolled in a High Deductible Health Plan (HDHP) • Cannot be enrolled in Medicare • Cannot be covered by another Health plan • Cannot be claimed as a dependent on someone else’s tax return

12. Health Savings Accounts • Funds are not subject to forfeiture; rollover from year to year • Maximum allowable contributions for Plan Year 2009: • Single: $3,000 • Family: $5,950 • Monthly service charge: $3.20 • Additional contributions to the HSA can be made outside normal payroll deductions • Contribution tickets are included with the HSA Welcome Kit to make post-tax contributions • It is the HSA account holder’s responsibility to ensure the total contributions do not exceed the maximum allowed by the IRS

13. Health Savings Accounts • Money in the HSA can be used for an emergency situation for a non-qualified expense • The distribution would qualify as taxable income • 10% penalty tax would be assessed • NOTE: Agencies should not take a December payroll for January coverage, unless the employee already had an HSA account. • Investment opportunities are available through HSA administrator (JP Morgan Chase) • Must maintain a $2,000 minimum account balance to qualify • Investment transfers, contributions changes, and change of beneficiaries can be made anytime during the Plan Year • Catch up provision is provided • Age 55 or older may contribute an additional $800 per year above the HSA maximum • Tax Forms required for the HSA: • Distributions reported on Form 1099 SA • Contributions reported on Form 5498 SA